Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — SCOTLAND

The Secretary of State was asked—

Job Creation

Mr. Swinney: When he last met Scottish Enterprise to discuss job creation in Scotland. [17090]

The Secretary of State for Scotland (Mr. Donald Dewar): I and my hon. Friend the Minister for Education and Industry met representatives of Scottish Enterprise on 26 November when a number of issues, including job creation, were discussed.

Mr. Swinney: I thank the Secretary of State for his answer. At a time when unemployment in Scotland is at a higher level than in the rest of the United Kingdom, and with press reports this morning that more than 1,000 manufacturing jobs in Scotland are under threat, what can the Secretary of State do to persuade his right hon. Friend the Chancellor of the Exchequer to follow some economic policy other than total dependence on interest rates as a means of slowing the overheating economy in the south-east of England, which has nothing to do with Scotland?

Mr. Dewar: It is in the interests of the whole United Kingdom that we place public finances on a sound footing and get levels of growth that we can sustain and build on in the future.
I appreciate that there has been some disappointing news—it was well reported in the newspapers today—but there is always an ebb and flow and there has also been some good news. As the hon. Gentleman will realise if he reads the unemployment figures, which show a claimant count of 146,700—the lowest in Scotland since January 1980—and the index of construction and production, which was up 5.2 per cent. in the year ending the second quarter of 1997, there is no reason for being over-gloomy about the current position. There is every reason to continue to fight hard to build economic prosperity.

Mr. David Marshall: Does the Secretary of State agree that long-term unemployment is a huge problem in the city of Glasgow? Will he gave an assurance that the

Scottish Office will give its fullest support to Glasgow's bid for employment zone status, which will enable the city to tackle this critical situation?

Mr. Dewar: My hon. Friend can be assured that we fully back Glasgow's bid and hope that it will be successful. I remind him that the welfare-to-work programme, which deals with those who have been out of the labour market for a considerable time, is an enormously important commitment, backed by heavy funding on the part of the Government, and Glasgow, in Scottish terms, is a very important part of that programme.

Mr. Alan Clark: In considering disbursement of money from the Scottish Office, will the Secretary of State recall that in the entire county of Sutherland there are now fewer than 2,000 people engaged in agriculture and country occupations while in the city of which the right hon. Gentleman represents a part there are 82,000 registered drug addicts? Which section of society does he think is more deserving of reward from the public purse?

Mr. Dewar: I think that the choice is a false one; it is not a matter of choosing between the two, as the right hon. Gentleman knows. I welcome his interest and concern for those who are struggling in Glasgow. No doubt he will be glad of my assurance that we work very closely with Highlands and Islands Enterprise, local authorities and other agencies to examine the problems of areas such as Sutherland, with which we are very familiar. I hope that the right hon. Gentleman will take the pleasure that I do in the fact that a working party is closely studying land management and the ownership in that part of the world.

Mr. Canavan: Is the Secretary of State aware that yesterday the Wrangler jeans company announced 250 redundancies at the factory at Camelon in my constituency, and that that is a devastating blow for the work force and the entire local community? Will the Secretary of State therefore make urgent contact with the company to discover what can be done to save as many jobs as possible?

Mr. Dewar: I assure my hon. Friend that I appreciate the importance of this to his locality—it was disappointing news. I gather that it is proposed that production should go abroad on this occasion, but we shall do everything we can to help with the difficulty. Forth Valley Enterprise is already involved and my office is looking at the matter closely. We shall try to offer any constructive help that we can.

Mr. Ian Bruce: In his discussions with Scottish Enterprise, has the right hon. Gentleman mentioned the fact that it can offer new businesses coming to Scotland higher grants, that tourism in Scotland gets a lot more money, and that public spending there is higher too? Has he been able to reassure its members that Scotland will always enjoy that advantage over the other regions of England and that he will fight in Cabinet to ensure the continuation of that unfair advantage?

Mr. Dewar: That was a somewhat confused question. If the hon. Gentleman is asking for my view of the current discussions on the proper co-ordination of the inward investment effort across the United Kingdom, I certainly


welcome such co-ordination. In the context of regional selective assistance, the hon. Gentleman will know that there are guidelines on the money per job that can be offered which apply across the United Kingdom. We observe them closely in Scotland. It is true that Scotland has a big success record, but that record is based on the virtues and merits of the services offered, not on any unfair advantage. I welcome sensible co-ordination which ensures that every part of the UK can properly put its case. That is what the current discussions are about.

Ms Squire: Like my hon. Friends, I represent a constituency that has felt the full impact of large-scale unemployment. Will my right hon. Friend join me in paying tribute to the success of local authorities and local enterprise companies that work together on job creation, especially in Fife, where we have the fast-track skills seekers youth employment initiative involving 1,100 businesses, and where we have attracted inward investment? Will my right hon. Friend also join me in welcoming the unequivocal commitment offered by Hyundai last week to establish 800 new jobs in Dunfermline by this time next year?

Mr. Dewar: I am happy to endorse my hon. Friend's good opinion of the efforts made by local enterprise companies and local authorities, in Fife and throughout Scotland. We are watching the Hyundai situation closely. There has been a good deal of rather excitable copy in the press about the costs of attracting that company. Most of the figures that I have seen have been wildly exaggerated. I also remind the House that under regional selective assistance and the many other elements involved payment is not made until the jobs are there: no jobs, no payment. However, I welcome the fact that the company has made it clear that it is committed to completing the first phase on time. We shall watch carefully—the more so in view of the unfortunate shock waves that have hit the Korean economy.

Dr. Fox: What do the Secretary of State and the Chancellor of the Exchequer expect to happen to unemployment in Scotland over the coming year? Following the job losses at Wrangler, Pringle, Grampian Brands, Telecom Sciences and others, who else will be joining the dole queue to satisfy the Chancellor's commitment to preparing for economic and monetary union?

Mr. Dewar: That is a very prejudiced view of what is happening in the Scottish economy. I have before me a long double column of recent job increases, but I do not think that swapping that sort of statistic is very helpful. The important point is that unemployment is low and there is growth in the economy. Our aims and policies, in Scotland and the rest of the country, are designed to sustain that state of affairs and to make sure that we avoid the stop-go cycles with which the hon. Gentleman, given the record of the Government he supported, will be very familiar.

Mr. Ernie Ross: Does my right hon. Friend agree that the new deal must be tailored to meet local job creation requirements? The Minister for Education and Industry was in Dundee recently at a meeting hosted by Michelin and NCR—a meeting called to reflect the concerns felt on

Tayside by all sections of the community. The one thing that marks out Tayside is the co-operation across the board between all in an effort to make it a successful pathfinder area.

Mr. Dewar: The Government see the importance of welfare to work as real and pressing. Dundee is a pathfinder area, and I am very satisfied to hear reports from my colleagues that these matters are going extremely well there; that was an impression that I gained from my own recent visit to Dundee. I associate myself with what my hon. Friend said about Michelin and NCR, and the level of commitment shown by local employers generally. I hope that my hon. Friend will not be embarrassed if I say that the hard work of both Dundee Members—my hon. Friends the Members for Dundee, East (Mr. McAllion) and for Dundee, West (Mr. Ross)—has been a feature of that effort.

Higher Education

Mr. Welsh: How many Scottish universities he has visited since 1 May to discuss higher education provision in Scotland. [17091]

The Minister for Education and Industry, Scottish Office (Mr. Brian Wilson): My right hon. Friend the Secretary of State visited the university of Dundee in November. I visited the universities of Abertay Dundee and Strathclyde in September and the university of Edinburgh in November.
My right hon. Friend and I attended a working dinner with the principals of the Scottish higher education institutions at the university of Glasgow in June. My right hon. Friend also addressed a meeting of the Committee of Vice-Chancellors and Principals in September, and I attended the annual forum of the Committee of Scottish Higher Education Principals in October.

Mr. Welsh: The Government claim that nobody should be deterred from higher education because of financial circumstances. Why, since the abolition of maintenance grants and the introduction of tuition fees—in addition to student loans—have applications for universities fallen by about 10 per cent.? Will the Government now abandon that short-sighted and disastrous policy?

Mr. Wilson: The hon. Gentleman would be well advised to wait until the figures are finalised. He would do his constituents and the young people of Scotland a service if he contributed to a more accurate flow of information.
The three virtues of our proposal are, first, that it will put up to £140 million extra a year into Scottish higher and further education; secondly, 40 per cent. of Scottish students will pay not a penny in tuition fees; and thirdly, when the vast majority of students in Scotland graduate, they will repay less per month than at present. If the hon. Gentleman would help to get those three messages across, he would be doing the young people of Scotland a service. I would send the same message to everyone who has participated in misinformation, possibly based on misunderstanding.

Mrs. McKenna: I welcome my hon. Friend's statement. Does he agree that access to higher education


is just as important for adults as it is for young people, and that the announcement last week of £28 million for out-of-school child care is an important part of that? Will he confirm that access to that is available to lone parents who will be taking part in further education?

Mr. Wilson: Indeed, I confirm that that will be the case from next April. That is a move forward of great importance to lone parents. We shall be producing a separate Scottish White Paper on lifelong learning which will cover a wide range of initiatives in that field.
My overwhelming message today is that nobody should be deterred from entering higher education by misinformation. I urge all potential students from all backgrounds to get the correct information and to make informed choices on that basis.

Sir Michael Spicer: The Scottish higher education budget is part of a wider education budget for Scotland. It is a matter of fact that that budget, per head of population, is 25 per cent. higher than it is for England. How long will that situation continue for Scotland, when the income differentials between England and Scotland have narrowed almost to nothing?

Mr. Wilson: Perhaps the hon. Gentleman could take a tutorial from the right hon. Member for Kensington and Chelsea (Mr. Clark), who has some acquaintance with Sutherland. The hon. Gentleman would then learn something about the geography and demography of Scotland, and he might understand why more factors than mere population statistics determine how public funds are allocated. The decisions within the Scottish budget are taken according to priorities and needs. We place a high priority, as I am sure do my hon. Friends south of the border, on education.
We shall continue to make choices and I shall continue to take pride in the extra money that we have managed to get into every aspect of Scottish education since 1 May. I remind the hon. Gentleman that one of the burdens that we are very pleased to bear is £80 million from the Scottish block grant for students who come from other parts of the United Kingdom into higher education in Scotland.

Dr. Lynda Clark: I am grateful for my hon. Friend's assurances in relation to adult students. I am particularly concerned about the situation of students from low-income families. Can the Minister tell us what policies there are to assist such students?

Mr. Wilson: It is important to understand that the headline caricature of £1,000 a year tuition fees is not true. On present statistics, 40 per cent, of Scottish students will be entirely exempt from tuition fees. That is extremely important.
The other major inhibitor to young people from less well-off backgrounds going into higher education is the concern that they will have to pay back maintenance loans despite perhaps not earning after leaving university—in other words, a mortgage-type loan. It is essential that it should be understood that after our proposals are implemented all repayments will be income contingent, which means that if the individual does not earn he or she will not repay.
If those factors are put together, it is obvious that there is no barrier to people from lower-income backgrounds going into higher education. On the contrary, there are many incentives to do so. I urge every young person who has the academic ability and qualifications to go into higher education to do precisely that.

Mr. Menzies Campbell: How many of the principals of Scottish universities whom the Minister and his right hon. Friend the Secretary of State have met have given unequivocal support to the proposal for tuition fees, especially bearing in mind the effect that the proposal will have on students from other parts of the United Kingdom deciding to come to Scottish universities?
Will the Minister take an early opportunity to visit St. Andrews university in my constituency, which has substantial experience of these matters? Indeed, 44 per cent. of its students come from countries in the United Kingdom other than Scotland. Will not the Minister relieve himself of the serious charge of discrimination by abandoning the discredited proposals for tuition fees at Scottish universities?

Mr. Wilson: I would be anxious to visit a cross-section of universities. If I went to St. Andrews with its 44 per cent. of students from south of the border, I might equally go to Paisley university with its 1 per cent. If I went to St. Andrews, I would not swallow whole everything that the principal told me. I might even advise the principal that if he wants to maintain the precise number of students from outwith Scotland, especially from England, it is absolutely open to him to do so. He could do so by taking more students from that large group who are not subject to tuition fees and are therefore not affected by our proposals.

Mr. Campbell: It would make it more exclusive.

Mr. Wilson: By definition, those who do not pay tuition fees are students from lower-income backgrounds. If the principal of St. Andrews wanted to go down that road, I would welcome it. I wonder whether the hon. and learned Gentleman would do so.

Inward Investment

Mr. Baldry: If he will make a statement on the interdepartmental concordat relating to inward investment in respect of Scotland. [17092]

Mr. Gray: What discussions he has had recently with the President of the Board of Trade on inward investment matters. [17099]

Mr. Wilson: The Government undertook in our White Paper "Scotland's Parliament", Cm 3658, to produce a concordat on common guidelines and consultation arrangements on the handling of financial assistance to industry. Discussions are proceeding among interested Departments.

Mr. Baldry: Is not the concordat really a con on the people of Scotland? The Government are seeking to give the impression that a Scottish Parliament will have control over inward investment into Scotland when the reality


is that under the dead hand of the Treasury control throughout the United Kingdom will be transferred to the President of the Board of Trade. Far from more influence being in Scotland, more influence will be exercised by Ministers in London. Is not one of the reasons why it has taken such a long time to publish the Bill on the Scottish Parliament the fact that it is difficult for even the most creative parliamentary draftsman to produce a Bill that is not entirely transparent in terms of the con on the people of Scotland?

Mr. Wilson: I can understand the attractiveness of that line of argument to the hon. Gentleman. However, the timetable is bang on schedule. That is a tribute to the draftsmen and to everyone else working with them, and one that refutes the hon. Gentleman's implied criticism. It is entirely proper, and much in Scotland's interests, that a concordat should be in place and that there should be a set of rules.
Locate in Scotland has done very well over the years because it is extremely good at what it does. It is not in Scotland's interests to have a state of affairs where various agencies are bidding against one another, expensively and unproductively. That is why it is right to have rules and a concordat and on that basis Scotland will continue to do very well with inward investment, which is in the interests of Scotland and the United Kingdom as a whole.

Mr. Gray: Will the Minister pay tribute to the record £5 billion of inward investment that was achieved under the Conservative Government? Does he agree that that record achievement stands a good chance of being undermined by the triple whammy of the Scottish Parliament, the social chapter and the minimum wage?

Mr. Wilson: The brief answer is no, but I will make a slightly fuller reply in response to the earlier point. Yes, I pay tribute to a great deal of the work that was done. I pay tribute to some of the decisions that were taken and to the continuing work of Locate in Scotland throughout that period. I do not pay tribute, however—I do not attribute this to the hon. Gentleman—to hon. Members, perhaps from other parties, who welcome job announcements, but who at the first whiff of grapeshot and difficulty start to condemn and say things that are very different from what they said when the announcements were greeted. We have seen examples of that in recent days in relation to the reports on Hyundai.

Mr. O'Neill: Does my hon. Friend agree that although the success of Britain has been considerable, as a share of the European total the number of jobs and projects that Britain has achieved has fallen, that it is essential that there should not be wasteful competition between the various parts of the United Kingdom, and that for that reason as much as for financial concerns we need a proper concordat between the English regional development agencies, when they arrive, and the Parliaments in Scotland and Wales and the Northern Ireland Development Office?

Mr. Wilson: My hon. Friend speaks with authority on these matters, and is absolutely correct. It is a paranoid response to believe that rules will always work against us. That is not the case. The political situation is changing,

and there will be devolved Parliaments in Scotland and Wales. At the same time new agencies with their own ambitions will emerge in England. It is entirely right within those circumstances that there should be rules that are simple to understand and enforceable, but in which flexibility, which has ensured the success of agencies such as Locate in Scotland, is maintained. That is simple, it is in Scotland's interests and it is what we hope to achieve.

Mr. Connarty: Is my hon. Friend aware of the excellent joint ventures across borders between, for example, Elf of France and BP in my constituency at Grangemouth, or Toatsu of Japan and Zeneca in my constituency, or Rhom and Haas and its Japanese partners? Does he agree that it is the stability of the relationships between Scotland and the regions of England that has created these? In fact, in the chemical industries people do not talk about Scotland, England or other parts of the UK, but about east coast Britain, which goes from Teesside to the Don in Aberdeen. Does not the small-minded and hypocritical approach of the Conservatives merely continue the attempt to divide people and to prevent decent partnerships from being put together between the private and the public sectors, which has always been their strategy?

Mr. Wilson: I agree with the thrust of what my hon. Friend says, although I do not associate the last charge with anything that we have heard from hon. Members today. My hon. Friend is absolutely right that part of Scotland's strength as an inward investment destination is its place within the United Kingdom. In a recent visit to the far east, I had excellent assistance and co-operation from UK representatives abroad. There is, of course, a crossover between what we can do for Scotland directly and our inward investment effort for the United Kingdom as a whole, and long may that continue—it is very much in Scotland's interests.

Mr. Wallace: Does the Minister agree that, as well as the important job of attracting inward investment, the Scottish Parliament will be wise if it tries to devise strategies to promote indigenous companies in Scotland? It might equally be wise to enter into a concordat with other development agencies in the rest of the United Kingdom to try to prevent—I think that these were the Minister's words—the expensive and unproductive outbidding that there has been? Will the Minister assure the House that that will be a decision that the Scottish Parliament can freely make and not be bound beforehand by any decision of the Secretary of State?

Mr. Wilson: The Scottish Parliament's responsibilities in this area are clearly set out in the White Paper and will be translated into legislation. They are easily understood and must be enforceable. I have no doubt that the political focus that the Scottish Parliament will put on issues of economic development and inward investment will be beneficial for Scotland. I must make it clear that we are completely evenhanded. I am very anxious to stress again the support that is available to indigenous companies. No case has been brought to my attention in which indigenous companies have been refused assistance because resources were unavailable through the investment that was made in attracting companies coming into Scotland. The happiest arrangement of all is for


inward investors to stabilise, expand and become indigenous companies. The sooner we stop making these false distinctions the better.

Mr. Alasdair Morgan: Given that Locate in Scotland is one of the most successful inward investment agencies in Europe, will the Minister explain why new rules are necessary at this stage? Furthermore, as Scotland usually competes not with the north-east of England but with the Czech Republic or the Irish Republic, is there not a danger that new rules will reduce the total amount of inward investment into the United Kingdom rather than transfer it to somewhere else in the United Kingdom?

Mr. Wilson: Let us be clear about this: Locate in Scotland does better for Scotland within the United Kingdom than any other development agency in Europe, and that is how we intend to keep it. The hon. Gentleman asked why we needed to change or update the rules. It may have escaped his notice that major constitutional change is taking place. There will be a Scottish Parliament and a Welsh Parliament, and there will be a group of powerful economic development agencies in Europe. The hon. Gentleman should understand that rules can work in Scotland's interests. The idea that someone is always trying to steal our piece and working against Scotland is ridiculous. I welcome the rules, and we shall work with other Departments to bring them to fruition.

Mr. Ancram: Why were these important and totally foreseeable inward investment issues not resolved before the devolution referendum, which has given them such unhelpful exposure? Does the hon. Gentleman agree that the unseemly Cabinet row that is now raging is very damaging to inward investment not only in Scotland but in the rest of the United Kingdom? Does he share my fear that if his right hon. Friend the Secretary of State and his colleagues in the same Cabinet find it so difficult to agree on such matters it will be well nigh impossible in the future for a Scottish Parliament, a Welsh Assembly and a queue of English regions to do so? Is that what his right hon. Friend meant by devolution strengthening the United Kingdom?

Mr. Wilson: The right hon. Gentleman should not always believe what he reads in the newspapers. There is constructive dialogue to produce the best possible solution for Scotland and for the United Kingdom as a whole. That is our aim, and that will be our achievement.

Ferry Services

Mrs. Ray Michie: If he will ensure that the present level of Caledonian MacBrayne ferry services is maintained. [17093]

The Parliamentary Under-Secretary of State for Scotland (Mr. Malcolm Chisholm): The Government are committed to safeguarding appropriate lifeline ferry services for communities in the highlands and islands, and to maintaining Caledonian MacBrayne in the public sector. The level of service on individual routes within the Caledonian MacBrayne network is regularly reviewed by the Scottish Office and the company in the light of changing service requirements, the introduction of new vessels and other relevant factors.

Mrs. Michie: The Minister must be aware of the increasing concern that Caledonian MacBrayne is not able

to maintain services. When will a decision be made about the Tarbert-Portavadie service? I take this opportunity to give the Minister a friendly but timely warning that he will encounter enormous opposition if any attempt is made to downgrade or remove the Dunoon to Gourock service, given the damage that it would cause to the economy of Dunoon. In the 1980s, the Tory party tried to remove the service, so I hope that the Labour Government will not go down that road.

Mr. Chisholm: Ministers have given approval for the Tarbert service to continue for the summer of 1998 pending further consideration in the comprehensive spending review. A report commissioned by the previous Government on the Gourock-Dunoon service is awaited. It will examine a number of options, and the recommendations will be carefully considered. I remind the hon. Lady that in 1981, when there was a proposal totally to withdraw the CalMac service on that route, my right hon. Friend the Secretary of State gave evidence for the objectors at the public inquiry.

Mr. Godman: Is my hon. Friend aware that there is serious concern in Gourock about the management and development of the company under the regime of Admiral Rankin and Captain Simpkin and that the two vessels which operate the Gourock-Dunoon service are, in shipping terms, very elderly ladies and should be replaced long before 2002?
I hope that my hon. Friend will agree to meet a small delegation of the company's employees and me to discuss these issues. I also hope that he will ditch the report that was commissioned by the odd job lot opposite.

Mr. Chisholm: Of course we shall consult local bodies when we have received the report and I shall also be delighted to meet my hon. Friend to discuss the matter.

Anti-social Neighbours

Mr. Davidson: What plans he has to take action against anti-social neighbours. [17094]

The Minister for Home Affairs and Devolution, Scottish Office (Mr. Henry McLeish): We are giving effect to our manifesto commitment to take tough action on neighbour nuisance and anti-social behaviour. Provisions for anti-social behaviour orders will be included in the crime and disorder Bill. We recently announced proposals for further legislative and administrative measures to tackle this totally unacceptable menace in every community in Scotland.

Mr. Davidson: Do my hon. Friend and the Government accept that anti-social neighbours are a curse on good and decent people in all parts of Scotland? Will my hon. Friend pledge that the Government will take action during their first year in office? It is essential that action is taken quickly because the problem was completely neglected during the 18 years of the previous Government.
Does my hon. Friend accept that this is not simply a problem of council tenants misbehaving? Action must also recognise that many owner-occupiers and private tenants, often in previously council-owned houses, are also behaving in an anti-social manner. Simply to


have new rules for the easier eviction of council tenants will not address the whole range of problems. Does my hon. Friend accept that we must have action quickly?

Mr. McLeish: I could not agree more with my hon. Friend. This is not within my power, but I expect that the crime and disorder Bill will become law by the summer of 1998. Everyone should appreciate that we are embarking on the toughest ever crackdown on anti-social behaviour. It will cover local authority tenants and private tenants and, of course, it will also cover home owners. We intend to make sure that the mindless behaviour of the few in every community in Scotland who undermine at every turn the quality of life of the many will be vigorously tackled.
Let me make it quite clear that the orders will be tough. They will be proposed by local authorities and will ensure that people's freedom will be restricted. People could be restricted to their houses or to certain areas and, of course, many types of activity will also be restricted. A breach of an order will result in a term of imprisonment of up to five years and an unlimited fine. These are tough measures to tackle a tough problem. Scots are sick and tired of having to live in this way in many communities and we intend to take the action that will solve the problem.

Mrs. Laing: Will the Minister assure the House that the provisions that he outlined will extend to hon. Members whose constituencies neighbour that of the hon. Member for Glasgow, Govan (Mr. Sarwar), whom we are delighted, if rather surprised, to see in his place?

Mr. McLeish: I am sure that that contribution was about suggesting that every hon. Member supports the tough measures that the Labour Government are taking on anti-social behaviour. We expect that the orders could cover almost 600 people. That means that the tiny minority of people who are causing mayhem in towns, villages and cities will be tackled. That is real progress and we await with interest the passing of the Bill.

Mr. Charles Kennedy: Does the Minister recognise another matter in addition to his legislative proposals? For example, every time I visit west Inverness in my constituency for discussions with the three key public agencies involved—the police, the social work department and the housing department—they all point to the continuing resource starvation since the general election and the lack of improvement since the Conservatives were, thankfully, turfed out. Therefore, will he recognise that, until those agencies get more money, no amount of legislation will bring about a great practical improvement for people who are affected at the local community level?

Mr. McLeish: We appreciate that our measures will involve resources. We are willing to face that. The hon. Gentleman is right to say that we are speaking not just about anti-social behaviour orders. We need to look at the questions of eviction and of witness intimidation, which is rife in many cases, and, of course, we want inter-agency co-operation in relation to witness protection. This is a package of measures and I assure the House that we intend to pursue the matter speedily to get appropriate and effective action.

Miss Begg: I am sure that the constituents who have written to me describing the misery that they have

experienced as a result of anti-social neighbours will be delighted by my hon. Friend's statement, particularly his comment that not just council tenants but owner-occupiers and private landlord tenants will be covered. I urge my hon. Friend to ensure that, when such legislation is passed, anti-social neighbours are dealt with through the courts as quickly as possible to put the victims out of their misery.

Mr. McLeish: I am grateful for my hon. Friend's comments. I reassure her and the House that, when the Bill is passed, we intend to have proper procedures in place to maximise the speed with which anti-social neighbours are dealt with. That has been the problem: it has taken far too long to bring culprits to the courts. That has meant more misery for the victims, who can be found in every constituency.

Midlothian Community Hospital

Mr. Eric Clarke: When he expects construction of the new Midlothian community hospital to commence. [17095]

The Parliamentary Under-Secretary of State for Scotland (Mr. Sam Galbraith): I understand that the East and Midlothian NHS trust expects to submit a revised outline business case for the hospital to the NHS management executive by the end of this month.

Mr. Clarke: I thank my hon. Friend for his reply. I hope that he is aware that Midlothian is the poor relation in terms of medical facilities. We have two hospitals: the Rosslynlee, which is a mental hospital and is due for closure, and a geriatric hospital in Loanhead, which is due to be refurbished or replaced. As Edinburgh's Eastern general, Northern general and City hospitals, as well as the Princess Margaret Rose hospital, may close as well, my constituents are worried. They are not only poor; many are disabled, and to go to St. John's in Livingston or to the Western general in Edinburgh is an ordeal. I hope that my hon. Friend will give the utmost priority to the new hospital, which is badly needed in Midlothian.

Mr. Galbraith: I think I can give my hon. Friend an absolute assurance that no hospital will close until suitable alternative facilities are in place. The timing for development of the new hospital is a matter for the trust and the board, but I know that, with a doughty fighter such as him taking up an interest, the hospital will progress as quickly as possible.

Housing and Health

Sir Robert Smith: What representations the Scottish Health Department has received since October about the links between poor housing conditions and public health. [17096]

Mr. Galbraith: Since October, 127 representations have been addressed to the Department, almost all in response to a campaign by Shelter. The links between housing and health are clear, as our forthcoming Green Paper on the subject will mention.

Sir Robert Smith: I thank the Minister for that answer. In the light of the representations and the fact


that 93 per cent. of Scottish housing is below minimum energy efficiency standards, does he accept that, in the long run, investing in improving the housing stock will benefit the health service by reducing the winter health crisis?

Mr. Galbraith: I have absolutely no problem with that. Poor housing is undoubtedly one of the links to ill health. We recognise that. It will be re-emphasised in our Green Paper. Recently, however, we have taken measures to deal with the problem. We have reduced value added tax on materials for insulating houses from 17.5 to 5 per cent. and the welfare-to-work programme contains a special option to insulate houses. We are taking action that will benefit the health of the whole nation.

Mr. McAllion: My hon. Friend will accept that the statistics on the relationship between poor housing and poor health in Scotland are appalling. Ninety-seven per cent. of our stock failed a national energy efficiency rating, one in four houses suffer from damp and condensation and, every winter, there are 2,000 excess deaths as a result of poor housing in Scotland. Does my hon. Friend therefore accept that the link between bad housing and bad health in Scotland will never be finally broken until the Labour Government have the courage to recognise that we require a major programme of public investment in housing stock and in tackling the reasons for poverty, which cause so much ill health in our country?

Mr. Galbraith: I like to think that one of the differences that I have made to the health agenda is the recognition of the link between poverty and ill health, something that was always denied before. The problem relates not only to housing but to jobs, education, transport, leisure and recreation. Only when we have got these things right can people genuinely make choices, so we have not only to present them with information about the choices but to give them the economic wherewithal to improve their health.

University Students

Mr. Chope: What assessment he has made of the impact on Scottish universities of the number of students from England wishing to study at such institutions. [17097]

Mr. Dewar: Cross-border flows of students in both directions can contribute to a healthy diversity of backgrounds in our universities. The proportion of students from England attending Scottish universities varies greatly. In financial terms, English-domiciled students bring with them tuition fees paid for by local education authorities in England, and the remainder of the cost of teaching is met by grant funding from the Scottish Higher Education Funding Council.

Mr. Chope: I agree with much of what the right hon. Gentleman said, but my commitment to the Union comes from my four years' experience as an undergraduate at a Scottish university. How much would it cost the Department for Education and Employment in England to pay the tuition costs of English students at Scottish universities during their fourth year, thereby enabling them to benefit from the four-year Scottish education as

I did and as I know the hon. and learned Member for Edinburgh, Pentlands (Dr. Clark) did at the same time, in the same faculty and at the same university?

Mr. Dewar: I am absolutely delighted that the hon. Gentleman enjoyed his years at Dundee so much. I am sure that he benefited from them, although I would have liked to see further improvement.
As for the hon. Gentleman's question, the cost is variable. As has been explained, the tuition fees apply only to certain students, and getting on for 40 per cent. of them may be exempt. There are, of course, other misunderstandings about that, but, at the end of the day, English students, and, indeed, students from Northern Ireland and Wales, come to Scottish universities because they see advantage in doing so. I hope that they will continue to do so, as they are a very valuable addition to our educational kingdom.

Oral Answers to Questions — HOUSE OF COMMONS

The President of the Council was asked—

Statements

Mr. Rendel: What assessment she has made of the advantages of introducing time limits on Front-Bench responses to statements. [17120]

The President of the Council and Leader of the House of Commons (Mrs. Ann Taylor): I have not considered any changes to the House's rules on this, but I know that you, Madam Speaker, have often called for shorter questions and shorter answers, both on statements and at Question Time.

Mr. Rendel: Has the right hon. Lady noticed that the main spokesperson for the official Opposition seems to be taking longer and longer to reply to statements and that that not only makes it difficult for the Minister, who has to try to remember all the questions to answer, but tends to leave less time for spokespersons from other parties and for all Back Benchers? Will the right hon. Lady consider what to do about this in the Select Committee on Modernisation of the House of Commons?

Mrs. Taylor: I have some sympathy with the hon. Gentleman. There have been occasions when the official Opposition have taken a very long time, but there are of course times when a statement is complex and detailed questions have to be answered. However, I think that we could probably improve the situation.

Mr. Dalyell: Is this not actually a matter for the Speaker? Is there not a precedent in the fact that Mr. Speaker Selwyn-Lloyd on one famous occasion simply told the official Opposition that enough was enough?

Mrs. Taylor: Madam Speaker, it might be better if I left that to you.

Members' Allowances

Mr. Steen: If she will make a statement on the arrangements for the payment of Members' allowances. [17122]

Mrs. Ann Taylor: Allowances for hon. Members are provided by resolution of the House. Claims and payments are handled by the Fees Office, whose systems are designed to ensure accountability for the taxpayers' money involved.

Mr. Steen: Because of the misdemeanours of one or two Members of Parliament, there has been an understandable push for greater transparency when allowances are claimed from the Fees Office. However, is the Leader of the House aware that this has resulted in a plethora of forms such as C1s, which are the reimbursement claim forms, C2s, C3s, Members' car allowance scheme forms and Members' constituency mileage continuation sheets? There is also a 43-page document called "Parliamentary Salaries, Allowances and Pensions" which includes details of where to get help. It takes many hours every week to fill in these forms, but would not that time be far better spent looking after one's constituents? Surely, accountability and transparency do not have to mean excessive form filling. We are not all crooks.

Mrs. Taylor: I think that hon. Members have a duty to ensure that our own systems are transparent and that we are as accountable as people in other spheres of public service. I realise that there has been additional paperwork for hon. Members, but I think that the vast majority of them are not finding it difficult to comply with the regulations.

Prime Minister's Question Time

Mr. Robathan: What plans she has to review the arrangements for Prime Minister's questions. [17123]

Mrs. Ann Taylor: The new arrangements have been in use for barely six months, and I have no plans to review them.

Mr. Robathan: Does the right hon. Lady agree that, in a parliamentary democracy, the Prime Minister is accountable to Parliament? Did she see yesterday's report in The Times revealing that the Prime Minister had not voted since the summer recess—which may have prompted him to vote once, yesterday? Is she aware that the Prime Minister failed to declare a registrable interest by going to Silverstone, in 1996, and not putting the visit in the Register of Members' Interests? Does she agree that that shows that the Prime Minister does not consider himself to be accountable to Parliament? Furthermore, does she agree that he is treating the voters—all those, of whatever party, who elected us to this place—with contempt and treating parliamentary democracy and the House with disdain and contempt?

Mrs. Taylor: The hon. Gentleman was, I think, asking about Prime Minister's Question Time and accountability. Before I came into the Chamber, I checked the number of questions asked of the Prime Minister in the last week

of the previous Parliament, before the system changed—when a total of 16 questions were asked—and last week, when he was asked 25 questions. The figures mean that more hon. Members had an opportunity to ask a question of the Prime Minister and that, perhaps most important, more Back Benchers had an opportunity to ask him a question.

Sir Patrick Cormack: What attempt has the Leader of the House made to discover hon. Members' reaction to the change? Is she aware that many hon. Members who sat in the previous Parliament do not believe that an improvement has been made? Will she also give the House a total assurance that there will be no more arbitrary changes to our procedures without consultation?

Mrs. Taylor: Yes, I can give an assurance that, when we are considering changes to the rota—which may occasionally happen, depending on the pressures and the wishes of the House for more time for certain Departments—there will be consultations through the usual channels. We have had very few representations criticising the current format of Prime Minister's Question Time. As I said, many Back Benchers seem to approve of the fact that more Back Benchers now have an opportunity to question the Prime Minister.

Private Members' Bills

Mr. Mackinlay: If she will take steps to increase the time available for private Members' Bills. [17127]

Mrs. Ann Taylor: I have no plans to do so.

Mr. Mackinlay: Does my right hon. Friend realise that that is a very disappointing reply, bearing in mind the fact that we were elected as new Labour—[Interruption.] Some of us are Labour mainstream. Does she agree that, as well as checking the Executive, the role of Back Benchers is to be proactive in the House? It would therefore be greatly welcomed if she were to find parliamentary time so that the rank and file in this place could contribute to the legislative process.

Mrs. Taylor: I can confirm that my hon. Friend was absolutely on message about increasing the role of Parliament. I realise that Back Benchers have opportunities to be proactive, and that he is one of those who takes many of those opportunities and uses them to good effect. The Standing Orders of the House provide 13 Fridays in each Session for private Members' Bills. I know that some hon. Members think that that is not enough, but it is a rule of the House.

Mr. Forth: Does the right hon. Lady accept that many, if not most, members of the public do not wish to regard this place as a legislation factory? The thought of random, if not bizarre, legislation by private Members would scare the wits out of the public.

Mrs. Taylor: The public, like the House, have made their views on certain private Members' Bills very clear.

Mr. Rooney: Does my right hon. Friend agree that extra time would not be needed if certain hon. Members recognised the will of the House as expressed last Friday and did not try to obstruct it?

Mrs. Taylor: One of the most disappointing things about last Friday was the intervention by the hon. Member


for Beaconsfield (Mr. Grieve), who made it clear that, no matter how much time was provided for certain Bills, some Conservative Members would try to block them. Hon. Members have a responsibility to consider not just the strong views expressed and the strong majority last week, but public opinion.

Consideration of Bills

Mr. Chidgey: What assessment she has made of the advantages of spreading consideration of Bills more evenly throughout the parliamentary Session. [17128]

Mrs. Ann Taylor: The annual nature of the legislative programme inevitably means that it cannot be spread evenly throughout the Session. The possibility of carry-over, which was approved by the House on 13 November, creates an opportunity to improve the House's consideration of Bills. I hope that we shall be able to test that out on appropriate occasions.

Mr. Chidgey: I thank the right hon. Lady for that reply. I welcome the advance publication of certain Bills, which is helpful. To return to a previous point, however, is the right hon. Lady aware that, following the Jopling recommendations, there is less and less time for Back Benchers to debate issues in the House? A case in point was the wild mammals Bill last Friday—[HON. MEMBERS: "Wild Members?"] Hon. Members must have misheard; I am referring to the Wild Mammals (Hunting with Dogs) Bill, which had overwhelming support in the House and elsewhere. It is not tenable for a Government who have such a large mandate to rely on the Opposition not to oppose in order to get their Bills through. I ask the right hon. Lady to allow Government time so that the Bill can progress.

Mrs. Taylor: I do not think that there is anything I can add on that Bill. I believe that, post-Jopling, there have been a number of useful extra opportunities for hon. Members to raise issues. The Wednesday morning debates, for example, have proved extremely important for Back Benchers; that comment is slightly wide of the hon. Gentleman's original point. I believe that it is a question of swings and roundabouts, and that the interests of Back Benchers have been protected.

Mr. Pike: Was it not a fact that, in the debate on the report by the Select Committee on Modernisation of the House of Commons, it became clear that the carry-over of certain legislation would lead to the better distribution of legislation? Was it not particularly notable that a well-respected former Leader of the House, the right hon. Member for South Norfolk (Mr. MacGregor), wished to go even further than the report suggested?

Mrs. Taylor: I thank my hon. Friend for reminding me of that point. It is true that the very distinguished former Leader of the House, who happens to be in his place this afternoon, strongly supported the principle of carry-over. I am pleased that the second report by the House of Lords Select Committee on Procedure also accepts that there is a case for the carry-over of some Government Bills. This is the first Session of this Parliament; I am not sure whether there will be any Bills that are candidates during this Session. I hope that we can move towards looking at

legislation, especially if we can manage to publish draft Bills, in a more ordered way and I believe that carry-over will have a part to play in that.

Oral Questions

Mr. Canavan: What assessment she has made of the allocation of time to different Ministers to answer oral questions. [17129]

Mrs. Ann Taylor: We will review the rota from time to time. There have not been many criticisms of the existing rota, but I am always willing to listen to representations.

Mr. Canavan: Did my right hon. Friend notice that, in Scottish Question Time earlier this afternoon, we reached only Question 8? Until such time as the Scottish Parliament is established, can we have the restoration of a full hour of Scottish questions?

Mrs. Taylor: I sat through some of Scottish Question Time and I noticed that at 3 o'clock we were still on Question 3. I did not hear all the exchanges, so I do not know the reason for that. I know from conversations on the Bench that Scottish Ministers were disappointed by that situation.

Mr. Garnier: How many minutes has the Minister without Portfolio, the hon. Member for Hartlepool (Mr. Mandelson), spent answering questions or making statements or speeches at the Dispatch Box since his appointment to the Government?

Mrs. Taylor: I do not monitor those figures.

Modernisation Proposals

Mr. Rhodri Morgan: What are the main recommendations of the Select Committee on Modernisation of the House of Commons which (a) have been implemented, (b) were rejected and (c) are pending further decisions. [17130]

Mrs. Ann Taylor: A new style of Order Paper has been implemented. The recommendations of the Modernisation Committee on the legislative process were approved by the House on 13 November. I am pleased that none of the recommendations has been rejected.

Mr. Morgan: I thank my right hon. Friend for her reply. Has she received any representations about better protection of time for private Members' Bills? For example, has she received any representations that any private Member's Bill that gets a majority greater than one third of the total membership of the House should be able to proceed without let or hindrance from delaying tactics? I say that in the hope of encouraging private Members to be more proactive, rather than "Prozactive".

Mrs. Taylor: I answered that point earlier, to a certain extent, but my hon. Friend is entitled to make it again. If Conservative Members do not frustrate the Wild Mammals (Hunting with Dogs) Bill which was given a Second Reading last Friday, there is no reason why it should not progress further.

Local Government Finance (England)

The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): With permission, Madam Speaker, I should like to make a statement about the local authority revenue finance settlement for England for 1998–99. The Secretary of State comes before the House at about this time each year to make a statement about local authority finance for the following financial year.
There will follow a period of consultation with local authorities and others, after which I shall bring a report to the House, which, when approved, will finalise the arrangements. Today's statement is important to local authorities, because it gives them firm information on which to make progress in setting their budgets. The statement concerns England only. My right hon. Friend the Secretary of State for Wales will make an announcement today and my right hon. Friend the Secretary of State for Scotland will make an announcement shortly.
As this is the first such statement of the new Parliament, I hope that it will be helpful if I put it into a wider context. We were elected on a manifesto that pledged us to a renewal of local government. We aim to achieve the reinvigoration of local democracy, a commitment to best value, a prospect of greater fairness and increased local discretion allied to greater local accountability.
We have made good progress so far, although we still have some way to go. We have set up a new central-local government partnership to help local and central Government work in harmony. We have signed the European charter of local self-government, which the previous Administration refused to sign. We have brought forward legislation to provide for the release of £800 million in additional capital expenditure in England under our capital receipts initiative. That money will help the unemployed, it will be used to build and refurbish homes for those in need and it will support our wider new deal objectives. We have put local authority public-private partnerships on a clearer footing. We are supporting Lord Hunt's Bill on local authority innovation, which will allow for greater experiments in local democracy.
We are discussing ways of renewing local democracy with the Local Government Association. We are decentralising decision making to the local level. We have introduced a Bill to give London a voice once again. Tomorrow we shall publish our White Paper on regional development agencies, setting out how we shall work with local government and others to revive the regions of England. Shortly, we shall announce the pilot local authorities for our best value programme. Finally, in co-operation with the Local Government Association, we have started a review of the system of local government finance—and not before time.
Each of those items is important in its own right. Taken together, they demonstrate that we mean what we say about a new relationship and partnership with local government. We have done all that in just seven months in government, but our full progress will be judged not in seven months but over a full five years of a Labour Government.
We shall issue consultation papers starting later this year. Following that consultation, we shall publish a White Paper in the late spring.
This new relationship follows many years when the previous Government did not listen to local authorities and squeezed their expenditure year after year. Despite all that, local government has survived, I am glad to say. My aim is to build a strong partnership between central and local government to the advantage of our citizens and our communities.
The first important element of the local authority settlement is my proposals for the Government's provision for spending by local authorities. In forming my proposals, I have of course considered the pressures that local authorities will face in the coming year—which are considerable—and I have listened carefully to the views of the Local Government Association. In line with those views, we have chosen in the settlement to concentrate on the policy priorities—above all, education—that we set out in our manifesto, which was endorsed by the electorate.
We were elected on a pledge to stick to the previous Government's public expenditure totals for 1998–99. Nevertheless, my right hon. Friend the Chancellor of the Exchequer announced in his Budget on 2 July that, by careful consideration of the priorities for public expenditure, we had been able to make available an extra £835 million for revenue expenditure in English schools in 1998–99. I can confirm that we shall provide an extra £835 million of revenue support grant for our schools. That means that none of the cost of the extra schools spending will fall on the council tax payer, as was so often the case under the previous Administration.
We are providing £662 million for local authorities for the education of four-year-olds, following the abolition of nursery vouchers, as promised in our manifesto. I also propose to provide up to £130 million for the transitional costs of local government reorganisation, such as for the unitary authorities. We have also taken into account smaller changes that will take place in local government functions. Taken together, those factors mean that the Government's view is that the appropriate level of total standard spending for local authorities in England in 1998–99 will be £48.2 billion.
My right hon. Friend the Secretary of State for Health will today be making a separate announcement on resources for community care. My right hon. Friend the Home Secretary will today be making a separate announcement on resources for the police. Both are included in the figure that I have just quoted.
The £48.2 billion provides for an increase of £1.78 billion—or 3.8 per cent.—in local authority spending year on year. That is expected to be 1 per cent. above inflation, therefore allowing an increase in real terms, to reflect our key policy priorities.
Education is the top priority for this Government and, indeed, for the nation. Raising standards in schools is not only of benefit to children. It is an investment in our country's future. Altogether, we have made provision for an extra £1.06 billion—or 5.7 per cent.—to go into English schools in 1998–99. It can and should be spent in the classroom, reversing the years of neglect. It meets the pressures identified by the Local Government Association and enables a start to be made on raising educational standards, which we all are determined to see. That is a big step.
Community care is another important area in which local authorities are facing up to the difficulties involved. Local authorities provide a vital service by looking after elderly and disabled people. We have maintained previous plans to make resources available in that area—£350 million. We expect a reduction in the net costs of financing outstanding debt. Therefore, we have been able to make a larger than average increase in provision for some services, including a further £70 million for children's social services—the first substantial increase for three years.
As the House will agree, fire services provide an essential and much appreciated service in the community. Therefore, I am pleased to announce that we have increased provision for the fire service by 4.8 per cent. within the overall increase for other services of 1.4 per cent. Other services include highways, libraries, probation services and environmental services.
I now refer to how much assistance local authorities will get from the business rates and the national taxpayer, which together totals £37.51 billion. That includes the extra £835 million, to ensure that the cost of our extra provision for schools does not fall on the council tax payer. It also includes an extra £20 million to make possible the development of £200 million-worth of local authority private finance projects.
The business rate will be increased to 47.4p in the pound, as provided by the legislation, following the 3.6 per cent. increase in the September retail prices index. That means that we can distribute £12.52 billion of business rates to local authorities in 1998–99. I am today publishing the detailed basis for that distribution to local authorities.
I propose that the revenue support grant should be £19.5 billion. In addition, some £5.49 billion of specific and special grants will be available. The total revenue support grant for England on which I am consulting may need to be altered slightly as a result of consultation. The total may be increased if it appears that less provision is needed for the transitional costs of local government reorganisation.
I come now to the means of distributing the revenue support grant. At its heart is the standard spending assessment for each authority. An authority's SSA is its share of the total provision for all authorities, taking account of its local circumstances. It is not a spending target.
We were elected on a pledge to remove the unfairness that has dogged standard spending assessments since they were first introduced. We have discussed with local government during the summer a wide range of ideas for improving fairness. I am today announcing changes that are well founded in research evidence, which respond to long-standing concerns of many local authorities of both parties, and which remove the more blatant cases of unfairness.
I first propose a new basis for assessing spending needs for the education of under-fives. The nursery voucher scheme was wasteful and a bureaucratic paperchase. The money released by its abolition will assist in our programme to make universal provision for four to five-year-olds. The new distribution will recognise the number of pupils for whom local authorities currently provide. Authorities that need to expand their nursery education, and put forward sound plans for doing so,

will be able to get an additional grant from the Department for Education and Employment. That is just one element of the national child care strategy, of which after-school clubs form another part.
Secondly, I propose to tackle a piece of nonsense in the present formula. Currently some authorities have an incredible ranking on the measure of neediness. It is hard to believe that leafy Kingston upon Thames is as needy as beleaguered Barnsley. [HON. MEMBERS: "Hear, hear."] I am sure that the Liberal Democrats also agree with that. We have carried out, with the Local Government Association, a thorough re-examination. We have at last applied explicit principles to those calculations. I believe that the new measures of neediness that we are proposing are a clear improvement on what went before.
Thirdly, I propose a new basis for the allocations for elderly residential social services. The formula has had a thorough overhaul, using research commissioned by the Department of Health from the university of Kent. For the first time, it takes proper account of the changes in social services in the past five years, following the introduction of community care.
Fourthly, I propose a new treatment of debt incurred by local authorities before the current system was established in 1990. During the 1980s, local authorities had a choice. They could use capital receipts to pay off debt or they could use them to finance new capital expenditure. However, in 1990, the previous Government decided to penalise those which had chosen new capital expenditure during the previous decade. The previous Government treated everyone as if they had chosen to repay debt, whether they had or not. I am proposing to put that right wrong. [Laughter.] Just for the record, I am proposing to put that wrong right. [HON. MEMBERS: "Hear, hear."] I propose that we should reflect in the standard spending assessment each authority's actual debt as at 1990, if that improves its position.
Finally, I have given priority to tackling the great unfairness whereby visitors and commuters were assumed to have the same economic and social characteristics as the residents of the authorities that they were visiting. That was an anomaly exposed time after time in the House. The previous Government's formula treated people staying in the Ritz in London as if they were as deprived as the average local resident. That was unfair and wrong.
Even the research on that, commissioned by the central London authorities themselves, which were the greatest beneficiaries, did not recommend keeping the existing approach. From next year, we shall get rid of that glaring injustice. We shall take account of visitors and commuters; but only fair account.
I shall mention only one of the many other proposals for changes which were pressed on me, but which I have not taken up. It concerns the area cost adjustment. That is the means by which higher employment costs, particularly in London and the south-east, are recognised in standard spending assessments. I do not believe that the evidence is sufficiently clear enough to warrant a change this year. However, I am commissioning research to see whether there is a sound basis upon which to consider changes for this time next year.
The changes that I have outlined, with some smaller technical changes, are a big step towards making the grant system fairer, as we promised at the election.


Those changes will have a large impact on council tax levels in some authorities if the authorities do not adjust their spending accordingly. I accept that authorities and their council tax payers may need a period in which to adjust to those changes. I propose to phase in changes in the way in which standard spending assessments are calculated.
I propose that damping—or phasing in, as I prefer—of the larger corrections that we have introduced should be limited to the equivalent of half the SSA reduction. That strikes a reasonable balance between the need for time to adjust and the need to get more fairness into the system. There will again be separate phasing-in schemes for police and non-police authorities.
I also propose to repeat this year's scheme to phase in council tax increases that are directly due to reorganisation. The scheme would damp such council tax increases that are above a threshold of £52 a year at band D, for authorities that are subject to reorganisation from April 1998. It would also provide continued damping for the authorities reorganised in earlier years, where they exceed a threshold of £104 a year at band D.
Let me now refer to council taxes. We are examining in the local government finance review ways in which the fairness of the council tax might be improved. I do not propose to make any changes ahead of the results of that review.
I expect that, for the foreseeable future, the council tax will remain the prime means by which local residents contribute to the cost of local services. Each year, the Government identify a notional tax level for each valuation band. That is known as the council tax for standard spending.
We do that to calculate a distribution of grants that would enable all authorities to provide a standard level of service for a similar council tax level for a similarly valued property, whatever the differences in needs and resources. My proposals set that figure at £635 for a band D property. That reflects the previous Government's plans to increase council tax by 7 per cent.
The increase was built into the previous Administration's spending plans. That is not a prediction of the average level of council tax, nor of the band D bills for individual authorities. The actual council taxes in the individual authorities will vary considerably, depending on their spending decisions, their financing decisions, their collection performance and their efficiency. No Secretary of State could predict those factors with a high degree of accuracy for individual authorities.
The pressure on the council tax is inherent in the public expenditure totals set by the previous Government. We have sought to relieve pressures by a number of means, in particular by fully funding the £835 million extra for education. That extra funding for schools is worth £50 a year for the typical taxpayer. However, I have made it clear that local authorities must give full weight to the burden on their taxpayers when they come to set their budgets.
We remain committed to the ending of crude and universal capping, but in the light of our public expenditure plans, as both the Chancellor and I made clear to the Local Government Association conference in July,

capping will remain in place for 1998–99. We have provided extra money for schools. We cannot risk that being undermined by unplanned increases in spending.
I am today announcing my provisional capping principles for 1998–99. I am also issuing proposals for the calculation of notional amounts for authorities whose boundaries or functions will change from 1 April 1998. Those include reorganised authorities and local education authorities affected by the abolition of the nursery voucher scheme. The notional amount is the base level from which I shall measure the increase in budget in determining whether that increase is excessive.
My provisional capping principles make allowance for expenditure on community care, which is being met in 1997–98 by the special transitional grant, and for changing funding arrangements for the National Criminal Intelligence Service. The adjustments are necessary to make a fair year-on-year comparison of budgets.
Subject to the allowances that I have already mentioned and to other technical adjustments affecting individual authorities, my proposals for capping are as follows. As in previous years, authorities whose base budgets are more than 12.5 per cent. above their standard spending assessment will not be permitted any increase over their 1997–98 base budget, nor will any other authority be allowed an increase that would take it beyond 12.5 per cent. above its SSA.
I propose to allow each class of authority to increase its base budget more than in recent years. That will be helped by changes to the so-called passporting about which I shall tell the House. Let me explain the term passporting, as it had to be explained to me. There is a lot of science in the language of local authority finance, and I shall have a bit more to say about that later.
In the past, the Government recognised increased spending needs for a particular service, but prevented councils from spending that money, through the capping system. That was a ridiculous situation, and passporting is designed to deal with it. When an authority's standard spending assessment increases, that will follow through into its capping limit so that the money can really be spent.
The permitted increases that I propose for classes of authority are as follows. For inner London boroughs, the City of London and shire districts, I propose that the year-on-year increase should be limited to 1.5 per cent; for outer London boroughs, metropolitan districts, county councils, unitary authorities, and the Isles of Scilly, to 3 per cent.; for police authorities outside London, to 3.2 per cent.; and for the London and metropolitan fire and civil defence authorities, to 4.5 per cent.
For all classes of authority other than police, the year-on-year permitted increases are substantially greater than they were last year, particularly reflecting the extra provision that we have made for schools. Shire districts have been treated especially harshly in recent years, so I am permitting them an increase in 1998–99 that will be three times greater than in previous years.
That is not all. I can further announce today that, for all authorities, other than police authorities, budgeting up to 12.5 per cent. above their standard spending assessment, I intend to passport the increases for all service blocks within the spending assessments. That will extend the benefits of passporting to shire districts for the


first time. It will also be the first time that increases in highway maintenance, other services and capital financing blocks have been passported.
Those are important changes in the capping regime. They give greater discretion to local authorities; but I expect local authorities to look carefully at their permitted increases, including passporting, and to make a careful judgment about whether they need to make those increases in budget and whether their council tax payers can afford them.
Many authorities have budgeted below their capping limit in the past. I have given local authorities extra room within which to exercise their discretion, and I expect them to do exactly that. Those principles are necessarily provisional: I cannot take my firm decision on capping until authorities have set their budgets for 1998–99. When I come to take those decisions, I shall of course take into account all relevant considerations.
My Department is today writing with the details of the settlement to every local authority in England. That package includes a consultation paper setting out how we propose to distribute central Government support among authorities, including my proposals on standard spending assessments and damping. It sets out my provisional capping criteria, and includes my proposals for notional amounts. Copies have been placed in the Vote Office and the Library.
The package is large, and some elements are very complex and precise. That is possibly unavoidable for a system that distributes huge sums of money among 400 local authorities, all with different needs and resources. The basis of those calculations has been set out in detail, to assure the House and local authorities that each authority is being treated in exactly the same way.
We are reviewing how we might simplify the process in the long term, while retaining that reassurance. I know that if we can make the whole exercise simpler, it will be much appreciated by Members of the House, local authorities, the general public and especially me.
For the immediate future, I plan to provide the House, before the revenue support grant report is debated in the new year, with a plain English guide to these aspects of local authority finance. [HON. MEMBERS: "Hear, hear."] I told you we were radical.
The proposals that I have outlined today represent a substantial improvement on the settlement that local government could have expected, following the Budget of the previous Administration a year ago. There is £835 million extra provision for education. Standard spending assessments will be made fairer. Local authorities will have more scope to exercise their discretion on budgets. This is a better and fairer settlement than in previous years.
Too often in the past two decades, central Government in Whitehall seemed to be waging a war on local government in town halls. When Labour was elected on 1 May, we declared that it was time to bury the hatchet. Whatever the considerable difficulties we found—financial, social or environmental—we shall face them together, with local government, regardless of the party in charge of any specific town hall.
In just seven months, we have taken the first steps in developing that new partnership. We shall be judged on a full five-year programme, but the direction is right, the priorities are different and we are working in partnership.
The Government believe in local democracy. This year and next will be tough financially, but we are firmly on the road to reinvigorating local democracy, and restoring new and more positive relations between central and local government.

Hon. Members: Hear, hear

Sir Norman Fowler: Government Back Benchers cheer, but I doubt that very many will cheer once the implications of the statement have been understood. Whatever else he has done, has not the Secretary of State opened the way for major over-inflation increases in council tax next year, which will affect millions of ordinary council tax payers throughout the country? Does he accept that the net result of what he has announced today will be that council tax bills could rise by as much as 10 per cent. next year? Does he realise that, for many elderly people, that wipes out at a stroke any advantage that they might have had from the winter payment scheme?
The Secretary of State says that he has inherited our Red Book figures, but can he confirm that, since May, local authorities have been burdened with a wide range of new costs? The increase in inflation since May will add more than half a billion pounds to local authority costs; there have been no fewer than five increases in interest rates since May, also adding to costs; and the £5 billion-a-year pension tax in the Budget has a direct impact on local authorities of £300 million a year.
Moreover, can the Secretary of State confirm that the £800 million for education in England, which was announced in the July Budget and has now been announced again by the right hon. Gentleman, comes from the contingency reserve provided by the previous Government? It was in the previous Government's spending plans. Is he aware that many Labour local authorities—not Conservative; Labour authorities—are saying that this settlement could have a dire effect on personal social services, especially those for children and the elderly?
Does the right hon. Gentleman remember that last year the then Opposition spokesman, the right hon. Member for Holborn and St. Pancras (Mr. Dobson), said that the 1996 figures
make no allowance for inflation, the cost of pay increases or the cost of providing extra services for the growing number of old people and of children at school"?—[Official Report, 27 November 1996; Vol. 286, c. 343.]
Is it not that very settlement that the right hon. Gentleman has just announced to the House?
As for debt, will the right hon. Gentleman confirm that he got it right the first time he attempted to make the announcement to the House? Will he confirm that his changes to standard spending assessments will mean rewarding councils that have run up large debts and penalising councils that have been thrifty? Will he further confirm that his changes to the damping mechanism will cause acute problems for many councils, which can be solved only by sharp council tax increases?
Does the right hon. Gentleman recall that in September last year, the Prime Minister, then the Leader of the Opposition, said:
We have no plans to increase tax at all"?


Will not these major council tax rises that the Secretary of State has just announced hit the very people who relied on those promises at the election?

Mr. Prescott: We will take no lectures from the Opposition spokesman on taxation, assessments of need, relationships with local authorities or the benefits that council tax payers got for their money under the previous Administration.
I have admitted to a 7 per cent. band D increase in council tax—

Sir Norman Fowler: indicated dissent.

Mr. Prescott: That is exactly the same increase as the Tories allowed for—

Sir Norman Fowler: indicated dissent.

Mr. Prescott: Is the right hon. Gentleman suggesting that it was more than that? I say that it is precisely the same amount as the Opposition allowed for when they were in government. The facts are easily checked in the Library. Despite considerable criticism, we have accepted the public expenditure plans of the previous Chancellor of the Exchequer.
We have also made it clear that we are giving more money than is necessitated by inflation. The figures amount to a 1 per cent. real increase.
It is all very well saying that the money for education comes from the contingency fund, but of course the previous Government did not commit themselves to spending that amount on education. The previous Chancellor did not mention any extra resources for education. The fact that we choose to make education a priority is a reflection of our priorities, not those of the Opposition.
As the right hon. Gentleman knows, the effects on pensions cannot be calculated until the revaluation of pensions is carried out; pensions in this financial year are unaffected. The Chancellor has made it clear that if extra costs are eventually involved, he will take them into account at the appropriate time. The fact remains that local authority pensions in this financial year are unaffected.
In answer to the implied claim that local authorities were better off under the Tories, I remind the right hon. Gentleman of the electorate's view: the Conservatives had 240 councils in 1979; they now have about 30. That clearly shows what the electorate thought of the Conservatives' administration of councils and services.
The right hon. Gentleman claims that there is no extra money for children's social services, yet I have announced £70 million in that context. Nothing at all was provided in the previous three years—the right hon. Gentleman's colleagues could not find the money for desperately needy children and social services.
Our assessment of the social needs of local authorities is a good deal sounder than the assessments used by the Conservative Government, under whose rule people staying in the Ritz and in the Westminster area benefited from resources that should have gone to authorities with

far greater needs. Our standard spending assessment system represents a fairer approach, of working with local government in partnership to improve local government services. We are justly proud of that

Mr. Stephen Timms: I particularly welcome the new emphasis on fairness in my right hon. Friend's announcement, and the change to the treatment of capital financing charges in the formula. Will he join me in paying tribute to the long fight by the Newham Needs campaign for the abolition of the concept of notional debt, which played such a significant part of the formula used by the Conservatives?
Will my right hon. Friend confirm that the beneficiaries of the change that he has announced are not profligate authorities, but several of the hardest-pressed authorities in the country, including Sunderland, Barnsley and Tower Hamlets, as well as my own authority in Newham?

Mr. Prescott: Yes, I agree with my hon. Friend. The reassessment shows that Newham is in desperate need. It did not have a very high ranking under the assessment that I am changing. We make it clear that we are adjusting the programme so that Newham gets more resources. The present assessment is better than the previous one and is based on the greater needs in Newham. It is a good example of the way in which our fair assessment of the principles has applied.

Mr. Paul Burstow: We on the Liberal Democrat Benches welcome the Secretary of State's announcement on the local government finance review. Liberal Democrats want a more accountable system, which raises tax on the basis of ability to pay and guarantees greater freedom of action for local councils.
Is it not the case, however, that today's settlement is one of the tightest ever? Council tax bills are set to soar, and council services are set to suffer. People will pay more and get less. Will the Secretary of State confirm that the figures published only last week by his colleague, the Chancellor, show that council tax bills are set to rise by more than 10 per cent. this year—biggest increase since council tax was introduced by the previous Government?.
Does the right hon. Gentleman accept that the settlement fails to tackle the cash crisis in our schools? Does he accept House of Commons Library figures which show that, even after the extra money that is to be put in, this year there will be a 0 per cent. real-terms increase in funding for local authorities? Does he accept, therefore, that for every £1 that a school gets, there will be £1 off care for the elderly, as a consequence?.
Is the Secretary of State aware that more than 476,900 children aged five, six and seven are in classes of more than 30? Where in his statement today is the extra money that will pay for his pledge on class size reduction? Where is the extra money to pay for the 55,000 additional pupils coming into our schools next year? Can he tell us whether class sizes will go up or down next year?.
Does the Secretary of State accept that the previous Government underfunded community care, and forced social services into the business of rationing care for the elderly and disabled people? Will not the settlement mean longer waits for care assessment and provision,


tighter eligibility criteria and increased charges for home helps and meals on wheels? Are not the real losers from the settlement the most vulnerable pensioners?.
Will the right hon. Gentleman confirm that this is the last year of capping? Does he accept that capping distorts local priorities and undermines local accountability? Will he admit that because of capping and Labour's decision to stick to Tory spending plans, the responsibility for cuts and council tax rises this year rests with Whitehall, not with the town halls?.
Local council tax payers will recognise in the statement—[HON MEMBER: "TOO long."]—I am concluding—not just smoke and mirrors, which is how the previous Government always treated such settlements. This year. we have added Labour spin.

Mr. Prescott: We certainly have added Labour financial resources. I have spelt them out, and they have nothing to do with spin. Instead, there is extra money to fund the new services that are needed. All these matters are under review with the Local Government Association.
We have made it clear that this will be the last year of crude capping. We think that what we propose is different from what we had last year. We want to move forward to a proper form of financing local government.
I have already referred to the local government financial review. The issues are complex and detailed discussions are taking place. I shall report to the House at the appropriate time. It is necessary for the review to take place, for the very reasons to which the hon. Gentleman drew attention.
As for education, we have provided £835 million. It is apparent that there are extra resources for that sector, even taking into account increased demands. We have already started to abolish the assisted places scheme, and money has to be transferred for reducing class sizes, which will certainly not increase. We shall be judged over five years, and we have started to take the essential steps.
My right hon. Friend the Chancellor of the Exchequer talked of 10.5 per cent. in his pre-Budget statement, but that is not comparing like with like with my 7 per cent. The Treasury book figure was for Great Britain—scotland Wales and England. It takes account of increased earnings and employment, and it assumes that some authorities will use the headroom that is allowed in the new capping arrangements.
I made a joke about passporting, but that process will allow more services to be provided. The Government used to assess a local authority and the services that it should be allowed to cater for, and then tell the authority that it did not have the resources to make that provision. The passporting principle will allow authorities to meet local requirements without encountering capping. Surely that is a sound principle and one that meets the need for more resources.
I have no doubt that more needs to be done, but we have taken the essential steps to improve the relationship between ourselves and local government and to put things on a new footing, to ensure that better value and better services are provided by local authorities.

Several hon. Members: rose—

Madam Speaker: Order. Now that the hon. Member for Sutton and Cheam (Mr. Burstow), the Liberal

Democrat spokesman, has put his questions, I require one question per Member from the Back Benches. There will be a question immediately, not a statement.

Dr. Alan Whitehead: May I congratulate my right hon. Friend the Deputy Prime Minister on his settlement and, especially, on the changes that have been made to the standard spending assessment reckonings, along with the ending of the pernicious bed-night factor, which did one local authority very well?
Will the principles behind the changes in the SSA continue, and does my right hon. Friend intend to ensure that there is greater transparency in SSA principles at an early stage in discussion between the Local Government Association and the Government?

Mr. Prescott: We are addressing an important principle on the SSAs. The process should be spread over a longer period than one year, and we think that three years could be appropriate. We shall continue to use the criterion that we have employed, but we are reviewing it under current financial arrangements. I think that Southampton will receive an increase in its SSA of 3.7 per cent., which is more than the average for the unitary authorities. We shall be using the present criterion and discussing with the Local Government Association how it can be further implemented.

Mr. David Curry: Does the right hon. Gentleman accept that some council tax increases will be significantly higher than the 7 per cent. that has been predicated because of the weakening of the damping mechanism that he has announced? If the right hon. Gentleman is to get rid of crude capping, does he intend to maintain sophisticated capping? If so, what is it?

Mr. Prescott: It is a fair point that no Government can afford to ignore local authorities' expenditure. It would be foolish if I were to say otherwise. Indeed, I have made that clear already. When we set limits, we do not necessarily say that local authorities must spend up to them. We hope that they will exercise discretion. We are examining how we can have proper relationships between central and local government, because both have more than a passing interest in sound public finances. After 18 years of Conservative government, we were not left with sound public financing.

Mr. Peter L. Pike: Is it not a fact that the previous Government's final two statements at this time of the year on local authority financing did not fully fund education, which meant that local authorities had to squeeze other services? Does not it mark a significant change of direction that the new Labour Government are making a full commitment to funding £835 million, which shows that they are committed both to fairness and to local government?

Mr. Prescott: I am grateful to my hon. Friend for what he said. How education is dealt with is a very important point. The problem in the past was that Governments agreed that education expenditure could increase, but did not provide the resources. We have made it absolutely clear that the £835 million that we shall provide for


education will be fed directly into the revenue support grant, so that it can be spent and is not a penalty on the local tax payer.

Mr. Peter Brooke: Will the Secretary of State expand, preferably without rhetoric, on what he described as the fair account or amount for visitors and, in particular, commuters?

Mr. Prescott: The assessments, for example, of people in Westminster who are staying as commuters or visitors will now be considered at half the rate that applied before [Interruption.] We shall consider them just as visitors, not as residents. That is the main point that will apply in those matters. We have changed it in that sense.

Ms Rosie Winterton: Will my right hon. Friend give further consideration to a point that I have raised previously with Ministers, about allowing local authorities to use their collection funds accumulated from successful council tax collection schemes to alleviate their financial difficulties? Does he agree that that would not increase the amount ultimately paid by council tax payers, but could go some way to improve services for them?

Mr. Prescott: I recognise that my hon. Friend has been campaigning on that matter since she arrived in the House. It has forced me to see what resources are available from what is known as the collection fund, where, as an incentive, local authorities hold back certain moneys from the collection of rates and the council tax. The amount appears to be about £300 million. That money, according to previous legislation, which I believe still applies, can be used only to reduce the council tax payment. It is a matter of some concern. Resources are there. I am advised that current legislation prevents us from acting immediately on that, but we shall take it into account during the local government review.

Sir Paul Beresford: What does the Deputy Prime Minister anticipate will happen to the difference between local government total standard spending and budget next year compared with this year?

Mr. Prescott: If I heard the question correctly, the difference between the TSS and budget this year will be in the calculation of the expenditure.

Sir Paul Beresford: What does the Deputy Prime Minister anticipate will be the difference between the local authority TSS and budget next year compared with the TSS and budget this year?

Mr. Prescott: I thought that it was just me. I do not think that that calculation can be made. I do not have one at the moment, and I await the appropriate time for it.

Mr. Christopher Leslie: Is my right hon. Friend continually astonished, as I am, at the brazen way in which that lot over there made such a hash of the

financial programme for local government, and the way in which they fiddled the figures to benefit their own areas, unlike the way in which—

Madam Speaker: Come on, I want a question.

Mr. Leslie: Does my right hon. Friend recognise that that contrasts greatly with the way in which our Government are meeting the needs of local authorities, such as Bradford district, which have extremely diverse needs?

Mr. Prescott: Those are differences that one has to take into account. In this assessment, Bury was able to get an increase of 6.4 per cent.

Mr. John MacGregor: On pension funds, the right hon. Gentleman will be well aware that most local authorities are very concerned about the provision that they will have to make as a result of the abolition of advance corporation tax in a couple of years' time, and are looking to make that provision. Does taking into account mean considering but ignoring, or does it mean meeting in full the extra cost?

Mr. Prescott: That is a matter of some concern, and it has been discussed in the House. My right hon. Friend the Chancellor has made it clear that he will take into account the changes in the next financial year. We must await his statement to see exactly what he will do and what the proportion will be, after a decision has been made on the revaluation of pensions. A proper assessment cannot be made until the revaluation has been completed.

Mr. Alan Simpson: I congratulate my right hon. Friend the Deputy Prime Minister. Will he confirm that Nottingham, which becomes a unitary authority this coming year, will not now be faced with the decision to make £13.5 million-worth of cuts so as to reduce the council tax? Will he further confirm that when responsibilities for staff are transferred from the county council to the city—the staff will do the same job in the same place but receive a different pay cheque—it will not be assumed to be facing increases of only half the rate of inflation that would have been allowed under the county council?

Mr. Prescott: The assessments affect authorities differently. My hon. Friend's authority will receive a permitted increase in the budget of 3 per cent., which, with passporting, will allow it to meet extra requirements without being penalised by the capping regime. That is how we have made the system fairer. We are moving away from the crude capping arrangements. I am sure that that is what his authority would want, and that is what we have done.

Mr. John Greenway: Why has Ryedale district council been given a nil increase in its budget? Is not that a disaster for shire districts, which will result in cuts in services for some of the most vulnerable people in rural areas, as well as a massive hike in council tax?

Mr. Prescott: The reason is that the council's expenditure over the standard spending assessment is more than the 12.5 per cent. that I have announced will


be the capping limit. That is the reality. We have reviewed services and given our judgment on the SSAs. If an authority's expenditure over the SSA is more than 12.5 per cent., as the hon. Gentleman's authority's is, it will not benefit from the measure.

Ms Beverley Hughes: I welcome the statement. If I had achieved such a settlement from the previous Government in the years when I was leader of a council, I would genuinely have been very pleased. Does my right hon. Friend agree that the total spending on personal services represents an increase of about 5.8 per cent.? That increase, together with the retention of the community care grant in special transitional grant and the increase in money for children's services, will be widely welcomed. It gives the lie to the contention of Conservative Members that personal social services would be cut in the settlement.

Mr. Prescott: My hon. Friend has given a good example of how we have made SSAs fairer. Trafford's SSA will increase by 2.9 per cent., and it has particularly benefited from the changes that we have made to the elderly residential social services formula. That is about needs, justice and fairness, and it is a good example of the changes that we have made.

Mrs. Virginia Bottomley: The right hon. Gentleman made much of fairness and consultation. The town and country issues group of authorities represents a series of towns that dominate a rural hinterland. Will he or his Minister of State agree to meet that group, so that it can put its case direct to Ministers rather than through consultations with the Local Government Association? They can then hear its arguments for themselves.

Mr. Prescott: We intend to carry out considerable consultation with local authorities, including through video conferences and by other modern methods. I shall take into account the right hon. Lady's request for me to meet a delegation from her authority.

Mr. Phil Woolas: My question is straightforward. Does the Prime Minister—[Interruption.] I am sorry, I should have said Deputy Prime Minister. I was wrong, then right; or right, then wrong. Does the Deputy Prime Minister welcome the announcement by Mr. Ken Charnley, the leader of the Conservative group on Chorley council, that he has defected to the Labour party? Does my right hon. Friend think that he has done so because he considers the Conservatives to be incompetent and mean? He has bypassed the Liberal Democrats because, as they have shown today, they are two-faced and incompetent.

Mr. Prescott: I am sure that my hon. Friend will agree that that Conservative has left his party and joined the Labour party because these figures show that it is a fairer party and has dealt fairly with the problems in his area. In my hon. Friend's local authority area, the figure for education has now increased by 5.3 per cent., and the permitted increase in the budget is 3.8 per cent., whereas for Rochdale the figures are 6.5 per cent. and 4.9 per cent. That Tory party member has done what many Tory councillors have done over the years—left the Tory party,

leaving it with no organisation. The party that proudly proclaimed that it had 240 councils in 1970 now has fewer than 30. Councillors have left the party because the Conservative Government were not concerned about fairness.

Mr. James Paice: Does the Deputy Prime Minister realise that people in Cambridgeshire will see nothing fair in a settlement that breaks a promise that was given during the election campaign by the Prime Minister, to get rid of the iniquitous area cost adjustment? The settlement means that council tax in Cambridgeshire will rise by an iniquitous amount—considerably higher than the amount that was stated by my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler). However, the overall capping limits mean that expenditure cannot rise by more than the rate of inflation.

Mr. Prescott: As I have said, I am concerned about the area adjustment matter, but I am not convinced by all the current evidence. I take on board the hon. Gentleman's point, but I have promised to review the matter and make a statement about it. Cambridgeshire has had its resources for education increased by 5.5 per cent., although the permitted budget increase is 3.6 per cent. I do not think that the people of Cambridgeshire are likely to say that that is not good for the county.

Mr. Harry Barnes: May I pursue the matter of weighting in the context of people moving to areas such as Westminster, because that affects my constituency in the other direction? Has the enhanced population figure been given a reduced weighting? I do not think that that can be the case, because north-east Derbyshire suffers terribly. It has finished up with a smaller revenue support grant than it received previously. Rather than the principle itself, the weighting for people moving and the area cost adjustment need to be considered.

Mr. Prescott: My hon. Friend has spoken to me about the matter of the proper weighting for visitors and commuters. I know that he has another scheme in mind. Perhaps he would like to discuss with me how that might be considered in the financial review.

Sir Teddy Taylor: Is the Deputy Prime Minister aware of the special situation in Southend-on-Sea where, incidentally, we had five gains from Labour and no losses on 1 May? It will become unitary in May and will totally break away from the county of Essex. Southend has a much higher than average share of social problems because of the number of bed-and-breakfast establishments and houses in multiple occupation. It also has a much higher than average percentage of elderly people and a much higher percentage of unemployment than the rest of Essex. Will those factors be taken into account in assessing our needs in comparison with those of Essex?

Mr. Prescott: I think that the hon. Gentleman is correct. We have done what he asks, as is reflected in the figures. Those for Rochford and Southend, East show an increase in education spending of 6.5 per cent.


The increase in the budget, taking into account some of the factors that the hon. Gentleman mentions, is 8.4 per cent. I hope that that is acceptable.

Mr. Terry Rooney: When will the Government move to a triennial review system and get away from this annual nonsense? Will my right hon. Friend promise not to visit Bradford, because every time a Conservative Minister visited Bradford, we lost money?

Mr. Prescott: I cannot give my hon. Friend a timetable, but as I have said, we are reviewing the matter and considering a period longer than one year. Every year, much time is taken up by considering standard spending assessments, and meeting all sorts of delegations for many types of marginal changes seems to take up much of my Ministers' time. A fairer way to deal with this matter could be on at least a three-year period. We shall certainly take that into account in our review.

Mr. Tony Baldry: Is the Deputy Prime Minister aware that Oxfordshire is already threatened by the closure of day centres and by a reduction in provision for respite care and home help? The situation is desperate. The right hon. Gentleman's figures propose for Oxfordshire a reduction of nearly £2 million in the provision for personal social services. How on earth can people there be expected to accept a year-on-year reduction, when they already face a critical situation? Is not the consequence of his statement for Oxfordshire and for other counties that the most vulnerable will be hit and will have a substantial hike in their council tax bills?

Mr. Prescott: I believe that my hon. Friend the Minister for Local Government and Housing met the hon. Gentleman on Friday to discuss the implications of the settlement and, as he knows, the Government have had considerable discussions with the Oxfordshire authority, particularly arising out of the capping position last year. I hear what the hon. Gentleman says. We are dealing with more than 400 authorities. All have similar problems and all are trying to deal with them. We are trying to provide a fairer system.
With regard to Oxfordshire, there has been a 4.4 per cent. increase in the education budget for Banbury—

Mr. Baldry: But not in social services.

Mr. Prescott: Yes, but the hon. Gentleman's constituency is to have a 4.4 per cent. increase in its education budget and the permitted budget increase is 3.1 per cent. That compares well.

Mr. Baldry: What about social services?

Mr. Prescott: I understand all the problems that local authorities face, and they are no more difficult in Oxfordshire than they are in other areas. We have to be fair in how we deal with the matter and in how we distribute national resources. That is what we have done. I have stated how the hon. Gentleman has fared, and that is our position.

Several hon. Members: rose—

Madam Speaker: Thank you. We now come to the statement on social security uprating.

Social Security Uprating

The Parliamentary Under-Secretary of State for Social Security (Mr. Keith Bradley): With permission, Madam Speaker, I should like to make a statement on the uprating of social security benefits and on the re-rating of national insurance contributions for 1998–99. I should also like to report on our objectives for reforming social security.
This is the first benefits uprating announced by this Administration and, unlike those of previous years, it will not be marked by a long list of cuts to the welfare programme—not that we are content with the size of the budget. We cannot be complacent when, despite growing prosperity, spending on social security has continued to grow. It now consumes one third of Government expenditure and is set to break through the £100 billion barrier before the end of the century. That is more than is collected in income tax, twice what is spent on the national health service and nearly three times what is spent on education.
As important, we are not content with the way in which the money is spent. The huge cost that is our legacy has done little to reduce the amount of poverty. The inability to harness social policy, to use it as a tool for change, has not only been the main driver of welfare spending but has resulted in the greatest social division for generations.
We are committed to breaking with the past. We are undertaking a systematic review of the welfare programme. The review is both necessary and timely. We need a modern welfare system to reflect modern circumstances. Our welfare-to-work programme will provide people with a route out of benefit dependency, and our comprehensive spending review will lead to the modernised system that we need. I will say more about that later.
First, we have immediate business. The House knows that we are required to review the rates of benefits and national insurance annually. Our intention for the year 1998–99 is to uprate most national insurance benefits, child benefit and benefits for disabled people and carers by 3.6 per cent. That is the increase in the retail prices index in the year to September. War pensions will also be uprated by the RPI.
As in previous years, jobseeker's allowance and the main income-related benefits will be uprated by the Rossi index, which at September had a year-on-year increase of 2.4 per cent. As hon. Members will know, the Rossi index is the RPI less those elements for housing costs. It is a more appropriate index for income-related benefits, where housing costs are, in the main, met separately.
Most rates of deductions in respect of non-dependants have been increased over and above inflation. That will reduce the benefit that is paid in respect of housing costs to claimants who have a non-dependant living with them. Taking forward that measure allows us to reverse the previous Government's plans to extend the single room rent restriction. The withdrawal of the extension, which would have restricted housing benefit to people aged over 25, has been welcomed both inside and outside the House.
That was a hard choice in maintaining our commitment to live within existing spending ceilings. It is important to remember that the mandate that we so recently received was based on a manifesto which committed us to controlling public expenditure.
I shall deal now with national insurance. We do not propose to increase the rate of class 1 contributions paid by employees and their employers, or the earnings brackets for the three lower rates of employers' contributions. The rates of class 4 profits-related contributions paid by self-employed people will also remain unchanged. The lower earnings limit for class 1 contributions will increase broadly in line with the basic rate of retirement pension, as will the upper earnings limit which applies to employees' contributions only. Similar increases apply to the lower and upper profits limits for class 4 contributions. The weekly class 2 contribution paid by self-employed people and the voluntary class 3 contribution also increase in line with that formula.
The cost of the uprating will be £2.45 billion. The maximum available Treasury grant for the national insurance fund will be set at £800 million. Most new rates of benefit and the changes made to national insurance contributions come into effect on 6 April next year. Schedules showing the new rates of benefit and the new rates of national insurance have been sent to all hon. Members today.
The most pressing need is to develop our approach to people of working age. They are responsible for supporting their children. Their actions while in work will determine how adequate their income will be in retirement. The best we can do for people of working age is to give them the opportunity to work. That is our first objective for welfare reform.
The wage motivation to work is for most people compelling—with the best will in the world, benefits can never be a substitute for earnings. Equally, there are also very strong non-wage motivations for working which, in total, reflect and influence the shape of society. Work enables people to be in the mainstream of society, to make their own contribution, to develop their potential, and to offer a positive role model for their children. Work also provides access to social networks and to new opportunities for advancement. None of this is new. It could be argued that making work the best form of welfare has always been the objective of social policy, but the facts show that the current social security system fails actively to promote a return to work.
An indifference to social policy, and an assumption that unemployment is a price worth paying for economic success, have meant that millions of people have been set aside from the labour market and condemned to a life of dependency. Our objective is to root out that worklessness and to give all people of working age a chance to enjoy economic opportunity. That is why our new deal programme extends beyond the unemployed. We need to give lone parents and sick and disabled people worthwhile help. We also need to make sure that, where possible, work pays, and that tax and benefit systems encourage work, not deter it.
That is why we have a Whitehall task force on tax and benefits to help deliver the Government's pledge to streamline and modernise the welfare system. It is why we are introducing a minimum wage. It is why we are looking carefully at every benefit to see whether it helps or hinders people in achieving their aspiration to be in work. We are seeking totally to recast the aim and operation of welfare, and to make it clear that work, rather than benefit payment, is the right solution,

economically and socially, for people of working age. We will continue to support those people who cannot work.
The second group needing our attention is children. Our objective is to ensure that all children are supported, wherever possible, by their working parents. Nearly 3 million children now live in workless households, which represents a threefold increase since 1979. The best way to support these children is to ensure that their parents are working. They benefit from the lasting financial security that work ensures and from role models which help them to learn how they can live independent lives when they grow up. Our new deal for lone parents will help to tackle the problem by providing a comprehensive package of back-to-work help for lone parents.
Effective child care arrangements are vital, as nine out of 10 lone mothers would work if they could afford child care. The Government are committed to a national child care strategy, which will help parents, especially women, to balance family and working life.
Child support maintenance will have a major part to play. Receiving regular maintenance payments helps lone parents to work, independently of all other powerful influences on their ability to work. We must also reach a point at which an absent father's failure to provide proper financial support for his children is regarded as socially unacceptable.
Our ambitions do not stop at people of working age, because it is also essential to help pensioners. On average, pensioners' incomes have grown over the past 20 years, but the gap between the poorest and richest pensioners has widened. Moreover, projections show that the gap will continue to widen unless urgent corrective action is taken. Our objective is to promote financial security in retirement in a way that enables people to build up a stake in their own provision.
It is clear that the difference between richer and poorer pensioners is a result of the extent to which the former have had access to second-tier pension opportunities, and have taken advantage of the chance to save during their working lives. Secure income in retirement will be achieved when people of working age realise that the more that they and their employers make contributions to their own pension, the greater will be the reward when they retire.
Work—to fund savings—is the best form of pension provision, which is why we have launched our pensions review. That is also why we are consulting on stakeholder pensions and developing citizenship pensions, which will extend the opportunities for good-value pensions to the 8 million people who are poorly served by current arrangements. Our review will also begin to address current inequalities between the opportunities of women and men to have adequate pensions.
We are taking action to ensure fair treatment of pensions on divorce, giving greater rights to women who have contributed to the build-up of pension by supporting their husbands in the home.
We are determined to tackle the situation in which nearly 1 million pensioners do not take up the income support to which they are entitled. We have already commissioned research to establish the reasons why they do not take up that support. From April, we will begin pilot exercises to discover the best ways of delivering income support to older citizens.
As our manifesto has made clear, the Government believe that pensioners should share fairly in the nation's increasing wealth. That is not merely a long-term aim. We have already reduced VAT on fuel, and, from next year, we will abolish the gas levy—showing that we will act quickly.
In his pre-Budget statement, the Chancellor announced the winter fuel payment, which will pay pensioners £20 and the poorest pensioners £50. Those payments will be made in time for winter fuel bills and will be on top of normal pensions payments, which will be uprated next year, as I have already announced.
We are a modernising Government. We believe in bringing opportunities equally to all sections of the community, although we also believe that those opportunities bring responsibilities. Our reform will be guided by our objectives for the main groups that we are attempting to help: welfare to work for those of working age; security for older citizens, for now and in the future; and support for children.
As the House knows, the orders introducing the new benefit rates and the main elements of national insurance require affirmative resolution. We look forward to the wide debate on our programme for social policy to which that occasion will lend itself. I commend the statement to the House.

Mr. Simon Burns: I thank the Minister for his statement. Will he accept that, in the past, this significant annual statement has been dealt with by the Secretary of State for Social Security, and that, at the previous week's business statement, it was customary for the Leader of the House to publish the date of the uprating announcement? I am mildly surprised that no answer was given to my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard), who raised the matter at business questions, and that we have had such short notice of it today.
Is the Minister aware of the written answer given by the Minister for Welfare Reform, who said that an uprating in line with inflation would cost £600 million above the 1996 budget assumptions? I should be grateful if the Minister will tell the House where that money will come from.
The Government have proved by their actions since 1 May that, although sticking to the previous Government's overall spending totals, they had room to manoeuvre in withdrawing the changes to housing benefit for over-25s. Will the Government repeal the measures for under 26-year-olds? Does the Minister agree that there is something illogical in the current policy? What is the difference between a 25-year-old and a 27-year-old? Perhaps he will explain that to the House.
In the repeal of the housing benefit rules, the Government have shown clearly that they could have honoured their pre-election pledges on lone parents, if they had been minded to do so. Will the Minister—as we are on the issue of lone parent benefits—confirm that the Government have continued the freeze for existing lone parent claimants, therefore effectively allowing that benefit to wither on the vine for current claimants?
Does the Minister agree with the hon. Member for Kingswood (Mr. Berry), who said this week that, before the election, Labour described the abolition of help to lone

parents as "particularly spiteful"? Does he agree with the comments made by the Secretary of State for Social Security in the uprating order debate that
Cuts in lone mothers' benefits make the poorest families poorer"?—[Official Report, 19 February 1997; Vol. 290, c. 944.]
Will the Minister tell the House—as he and the Secretary of State for Social Security have singularly failed to do so far—what aspect of the issue is different now, compared to last winter, except that there has been a general election, and that the Labour party has milked the issue for all the votes possible by leading people to believe that Labour would not implement the previous Government's policy?
The Minister has also been trying to duck questions on the new deal on child care in the context of lone parents. I should be grateful for some answers on the child care issue, because there are so many unanswered questions. Will he explain what the charging policy for child care will be for the remainder of this Parliament? Will it be means-tested? I should be very grateful for an answer—an answer of substance, not a soundbite—to that specific question.
Does the Minister understand the irony in his statement that the Government's objective is
to promote financial security in retirement
for pensioners? How can he reconcile that objective with the raid on millions of personal pensions made by the Chancellor of the Exchequer in his July Budget, which was worthy of Mr. Robert Maxwell?
The Minister also talked about moving towards equality in pension opportunities between men and women. How can he reconcile that aim with the possibility that the Chancellor will remove the independent financial status of women in the United Kingdom?
The hon. Gentleman mentioned also the matter of reducing value added tax on fuel. Will he confirm that the Government—by reducing VAT on 1 September 1997, rather than on 1 October 1997—ensured that the pensions uprating was calculated on a lower inflation figure, costing the average pensioner just over £6 a year, whereas savings from the 1 September VAT cut are infinitely less than that?
Far better than most hon. Members, the Minister will understand that, since 1 May 1997, the Department of Social Security has been riven with differences of opinion between the Secretary of State and the Minister for Welfare Reform; there has been a plethora of reviews, which are getting nowhere, as even some of the reviews are being reviewed; and there seems to be utter chaos, with no one knowing exactly what others is doing.
Could the hon. Gentleman, just for once today, treat the House with some respect and answer the questions that have been posed to him so often in the past in Committee and in debates on the Floor of the House? We want meaningful answers to the questions arising out of the statement.

Mr. Bradley: .It is not the normal practice to announce when the uprating statement will be. In the past, the uprating statement has normally followed the Budget and it has been the Budget debate which has been announced. There is no problem there.
The published plans include an assumption of the cost of uprating. The assumption made for 1998–99 was too low, so the reserve will be used; it is designed for the shortfall between forecast and outturn.
It is extraordinary that the hon. Gentleman raises the single room rent limit. The Conservatives intended to extend the limit to apply to people up to 60, but they should welcome the fact that we did not proceed with that measure. We are continuing to evaluate the impact of the single room rent limit for the under-25s because there is a view that at that lower age, different circumstances apply compared with those for older people, some of whom may be forced to live in houses in multiple occupation or worse. We will continue that evaluation and report on it next year.
I can confirm that the higher rate for lone parents in receipt of child benefit will be £17.10, the higher rate for family premium in income support and the jobseeker's allowance will be £15.75, and in housing benefit and council tax benefit, the higher rate will be £22.05. The family premium for existing lone claimants on income support will still be £4.70 a week more from next April than is paid to two-parent families in the same circumstances. Existing lone parents receiving child benefit will still get an extra £5.65 a week on top of the basic child benefit. In terms of the new deal generally, it is our view that lone parents will be better off in work because of the national child care strategy. From the evidence we already have, they will be an average of £50 a week better off, which is far better than being dependent on very low benefits.
The hon. Gentleman referred to the tax credit system. The Chancellor announced in his pre-Budget statement that a working family tax credit was under consideration. We are considering all options; replacing family credit with a working family tax credit is only one of them. It must be pointed out, however, that most wage earners in low-income households with children are women. The proposed working family tax credit would build on the successful elements of family credit and would involve better help through the tax system for child care costs.
We are trying to create the economic conditions to ensure that pensioners have their fair share of the rising national prosperity which only this Administration are prepared to deliver. My statement, which will ensure that pensioners receive a 3.6 per cent. uprating in their pension, on top of the £20 for fuel costs,£50 for pensioners on income support, the reduction in VAT on fuel and other measures, including the abolition of the gas levy next year, is a package of help for pensioners which the Conservative Administration never even considered.

Mr. Dennis Skinner: Is my hon. Friend aware that in trying to meet the rising social security bill of £90 billion-plus, which will rise to £100 billion before the end of this Parliament, he would be in a much better position if, for instance, the Government realised, even at this stage, that it was necessary to increase taxes for people such as Members of Parliament and those who get even more money than we do? That is one approach which has, sadly, been excluded, but it will have to be returned to.
My hon. Friend talks about welfare to work and the new deal. It is difficult for me to understand that kind of language. I have seven villages in my constituency where pit closures took place three or four years ago. One thousand young men, who hitherto had training schemes under British Coal, no longer have training schemes.

Almost everybody is out of work in those pit villages. There is nowhere for those young men to go, as I hope the Minister understands. He is not saying, is he, that these people have got to get on a bike? I do not like that kind of language.
I want Ministers to understand that there are areas of Britain, including mine, where the idea of work being available is laughable for many people. Unless special measures are taken in that respect, we can talk about welfare to work only for areas where it is feasible. The Government should not rub the noses of people where there is no work at all in the idea of welfare to work. If the Minister will see the matter in that fashion, he may be able to deal with the problem generally.

Mr. Bradley: My hon. Friend always talks passionately, and rightly so, about the problems of his constituency and I hear clearly what he says. On his first point, I will refer his remarks about taxation to the Chancellor.
My hon. Friend talked about welfare to work. It is essential that we do not give up on unemployed people and that we give them hope for the future. It is essential that the welfare-to-work programme recognises the problems that my hon. Friend identifies. The programme must be tailored and it is important that we recognise that there are different regional economic problems. The programme must deliver hope for my hon. Friend's constituents.

Mr. Steve Webb: I welcome many aspects of the statement, but I want to press the Minister to look more closely at three aspects of it. First, will he look at provision for pensioners aged over 80? As happened under the Conservatives, the Minister has chosen to freeze the extra help for the over-80s at just 25p a week, which is an insulting amount. Does not he accept that pensioners over 80 are the poorest in the land and that many of them do not claim income support? Converting that 25p into a worthwhile sum such as £5 a week would guarantee help for the poorest and would give them not £20 a year, but £20 a month.
Secondly, I understand and appreciate why the single room rent reform was reversed. Would the Minister, however, look at the way in which that change has been funded? Has the increase in non-dependant deductions—that is, the tax on young people who live with their parents—gone too far? For the highest-earning young people, the figure has gone up by 36 per cent. in the statement. Will the Minister at least undertake research to see whether the change breaks up households? It may produce more demand for housing and more burden on the Exchequer.
Thirdly, we must return to lone parents. The statement means a freeze not for new claimants, but for the 1.5 million lone parents who are existing claimants. Does the Minister accept that many of those people will not move from welfare into work? Does he accept that, yesterday, the Secretary of State for Social Security seemed to acknowledge that looking after young children at home was a valid thing to do? Will he explain why he is cutting the real living standards of those families?

Mr. Bradley: I shall try to answer the hon. Gentleman's three questions. We recognise the plight of


very elderly pensioners and our pensions review will look specifically at that point. At a recent meeting of the review team at which Jack Jones, a doughty champion of pensioners, was present, that item was specifically put on the agenda. The pilot schemes that we are introducing to find out why the poorest pensioners are not claiming income support will recognise that many of those may be the very elderly. We must study the pilot research projects to find out why that group are not claiming their entitlement.
I am grateful for the hon. Gentleman's support for our decision not to extend the single room rent limit to 25 to 60-year-olds. I recognise that the non-dependant changes are hard choices, but I hope that the hon. Gentleman will recognise that we have protected the lowest-paid within that to ensure that the system is as fair as we can make it, in context. In our current housing review, which is under way as part of the comprehensive spending review, all those matters will be reconsidered as we develop a sensible housing policy and sensible housing benefit changes.
I have confirmed the figures for lone parents. I must put them in the context of the new deal and in the context of the speech yesterday by my right hon. Friend the Secretary of State about choice for lone mothers and about flexibility. The crucial aspect of the national child care strategy will be to ensure that that is a reality.

Ms Margaret Moran: : I welcome the opportunities that my hon. Friend outlined to move the poorest from welfare to work. As part of his review, will he consider the opportunity for substantial housing benefit savings that might be afforded through rent reductions? Does he accept that a 10 per cent. rent reduction would not only afford substantial housing benefit savings, but could offer many households the chance to move from welfare to work, alleviating the poverty trap?

Mr. Bradley: I am grateful for my hon. Friend's comments. I recognise and value her expertise, particularly on housing benefit. We recognise that housing costs can be a critical element in decisions on general reform programmes. I assure my hon. Friend that we shall look carefully in our housing policy review at the disincentives that emanate from the current system in our welfare-to-work programme. I should be grateful if she could send any further comments on that to me at the Department.

Mr. Andrew Rowe: The Minister may know that I have always been rather in favour of a minimum income scheme. One of the disadvantages of the idea is that it involves a minimum wage at some point. Now that the Government have decided that we shall have a minimum wage, will the Minister look carefully at the advantages of a minimum income scheme?
Ministers have constantly complained about the lack of skills in society. Will the hon. Gentleman give further thought to the 50-year-olds who have been sliced out of employment, often to save their employers' considerable pension contributions? Will he ensure that that pool of

potentially highly skilled people with the capacity to learn new skills is properly catered for in the new deal or in some other manner?

Mr. Bradley: I am grateful for the obvious overwhelming support for the Government's reform programme, particularly the recognition of the introduction of a minimum wage. I shall refer the hon. Gentleman's comments to the Taylor review of the tax-benefit system. I am sure that his contribution will be valued. We recognise that many people have been dumped out of employment and on to benefit dependency at too early an age. That is not acceptable. I welcome the hon. Gentleman's recognition of that. It is unfortunate that the Conservatives did not recognise the value of people in that age group when they were in government and did not do anything to help them get into work, where many of them want to be.

Audrey Wise: My hon. Friend said that all children should be supported by their working parents. For lone parents, that implies full-time work, as one part-time job is not enough to support a family. Will he clarify what he means? Will he also tell the House why child care is regarded as a job if done by a stranger, but not if done by the child's mother or father?

Mr. Bradley: The purpose of our reforms is to create opportunities and flexibility, so that people can move flexibly into work. Many lone parents want to work. The changes that we have made to family credit and the increase in the child care disregard to £100 will help to fund those proposals. The national child care strategy, with the development of 30,000 after-school and out-of-hours clubs to benefit up to 1 million children will help in that. Our package of measures will give real help to ensure that children do not remain in poverty and are able to benefit from the fruits of economic prosperity.

Mr. John Swinney: The Minister said that his comments would not be marked by a long list of cuts to the welfare programme. There may not have been a long list, but there were cuts. Does he accept the growing anxiety about the Government's proposals to cut child benefit for lone parents? Will he give a commitment that the Government will think again about the concern that is being expressed and remove the relevant provisions in the Social Security Bill?

Mr. Bradley: I have made the rates of child benefit for next year clear in my statement. Personal allowances and children's additions in income support will be uprated as normal. That will mean an increase in benefits. Lone mothers in low-paid work will benefit from the full uprating of family credit by the Rossi index. I have confirmed that the child care disregard will go up to £100 per week from next June. All those measures will help lone parents and their children. All Departments, including the Department of Social Security, always look carefully at new measures and evaluate them before undertaking the reforms that are necessary for a modern social security system.

Mr. John Cryer: The aim of full employment, which seemed implicit in my hon. Friend's statement, is laudable, but I do not understand how that is


compatible with cutting the higher rate of child benefit for single parents, which provides a disincentive to work. The higher rate generally applies only to single parents who are already in work. Those who are not in work are likely to be on income support and do not get the means-tested money.
My hon. Friend talks about tough decisions. Tough decisions are not made by people who earn a minimum of £43,000 a year. Tough decisions are made by people who live in genuine poverty, which has affected ever greater numbers in this country for the past 10, 15 or 20 years. People who have to choose between eating and heating are the ones in difficulty. We are in danger of making their situation worse by cutting the higher rate of child benefit.

Madam Speaker: Order. That was an interesting contribution, and would have been so in a debate, but there was not a question in it. If the Minister would like to make some comments, of course I shall allow him to do so, but I want questions from other hon. Members.

Mr. Bradley: I agree with your view, Madam Speaker. As I have said, there will be an opportunity for a full debate on the orders when they are presented to the House, before they are implemented.

Mr. Tam Dalyell: Is my hon. Friend aware that, in the year that I was elected to the House, Buckingham palace sent just over 200 telegrams of congratulation to those who had reached their 100th birthday? Last year, the palace sent 5,460. Anecdotally and from constituency experience—I have no definite evidence—I suspect that many nursing homes and homes for old people do not take up the income support that people in their late 90s are unable to claim themselves. Will that be addressed in the review? Will something be done to help carers, who play an increasingly important role?

Mr. Bradley: I am grateful for my hon. Friend's comments. He is right about the number of telegrams that are sent out. As a new Minister, I was surprised to learn that there is a dedicated official for that task because of the number of telegrams to be sent. My hon. Friend has raised important points, which our pensions review and our review of long-term care for elderly people must take into account. It is crucial that elderly people do not live in abject poverty.

Mr. David Rendal: Will the Minister confirm that hidden in half a sentence of his statement was a comment that made it clear that the thresholds at which employers pay national insurance will be frozen in cash terms? That means that he is introducing a real-terms increase in business taxes.

Mr. Bradley: May I clarify that? No employer will pay more on existing payrolls as a result of the freezing of the bands.

Mr. David Winnick: Will the Minister bear in mind the fact that unemployed people whom I often see are unemployed not because they want to be but because of genuine disability or age—people who are in their 40s and 50s have been made redundant

and cannot find work? They want to find employment. Despite what the Government have said, there will continue to be much difficulty for such people. They should not be penalised by any cuts in social security payments. That would be wrong.
Like my hon. Friends, I welcome what the Government have done for pensioners in the past six months—actions which the Tories would not dream of taking, such as the action on fuel payments. There is more to be done, as my hon. Friend has said. Far too many pensioners are living in dire poverty, and among them are a good number of war veterans. We should do justice to those people, and as soon as possible.

Mr. Bradley: I am well aware of my hon. Friend's continuing and effective championing of the plight of pensioners. I recognise that and pay tribute to him for it. Our pensions review will take into account the matters that he has raised; it is essential that it does.
Clearly, there are barriers to work. Part of the pilot scheme that we are setting up—especially the £195 million of new deal money to help people with disabilities—will look at those barriers so that we can effectively address them. As my hon. Friend rightly said, many such people want to work, to recognise their capacities rather than their incapacities. We have to learn from the pilot experience to ensure that the new deal is effective for all people who want to move from benefit dependency into work.

Mr. John McAllion: My hon. Friend rightly recognised the growing gap between poor and rich pensioners. Does he also recognise that the present generation of pensioners bequeathed to our generation a national health service and a welfare state from which all of us have benefited? Does he further recognise that, for the poorest among them, it is now too late to take out a second-tier or stakeholder pension? At the very least, we owe it to them to restore the link between pension increases and average earnings, which was so callously broken by the Conservative party in 1981.

Mr. Bradley: Clearly, we recognise the plight of pensioners who have not been able to make proper second-tier provision. That is why we are looking closely at those who are not claiming their income-related benefit—income support—to ensure that they at least come up to the minimum level. The pensions review recognises the plight of the poorest pensioners. I assure the House that representatives on that review will not let the Government forget it. Through that review, we will explore how we can most effectively help those poorest pensioners.

Mr. Tony McWalter: I thank my hon. Friend for his statement. Will he reflect on his rather anodyne words about the Child Support Agency, which is a vital component of social security? It would be more appropriate to describe its operations with alarm, especially as the resources that it is allocated for the detection and pursuit of people who evade its operations seem to be very low. Does my hon. Friend think that the agency should be deemed not the Child Support Agency


but a child neglect agency? Will he consider seriously whether its operations should be more profoundly reviewed?

Mr. Bradley: I thank my hon. Friend for his comments. As I mentioned in the statement, we recognise the importance of payment of child maintenance. It is not acceptable for the money not to go to the parent who cares for children. It is an essential element of such parents' income and they need to know that it will be reliably and efficiently received. That is why we are undertaking a fundamental review of the CSA. We hope to bring forward proposals on the matter in the first half of next year.

Mr. Burns: Will the Minister please tell the House categorically whether the Government have any plans at all in the new deal for lone parents to bring in compulsion, as there is compulsion in welfare to work for young people? Yes or no?

Mr. Bradley: The Secretary of State has made it absolutely clear that compulsion is not the issue. We shall continue to work to help lone parents to get into work. That is what they want and that is what we shall continue to do.

Welsh Ports (Blockades

Mr. Nigel Evans: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 24, to debate an important matter that requires specific and urgent consideration, namely,
the blockading of Welsh ports by farmers at Holyhead and Fishguard, and threats that the illegal action will spread.
I should make it absolutely clear that we cannot condone the action of the farmers involved. We understand their anger and resentment, and sympathise with their plight, but we cannot condone the blockading of any ports in Wales or elsewhere which prevents the free movement of goods by people going about their lawful business.
The wilful dumping of 40 tonnes of beefburgers on Sunday night in Holyhead harbour was disgraceful, as were the skirmishes with the police. The blockading of lorries at Holyhead and Fishguard cannot be allowed, and the turning back to Rosslare of six lorries carrying £600,000-worth of beef and lamb flies in the face of free trade.
The Government need to address this urgent issue quickly. Enough damage has already been done. As the actions of French lorry drivers demonstrated recently, compensation claims will follow—as happened with British lorry drivers who saw their livelihoods being damaged. The Government must act to ensure that all ports remain open at all times. They must not allow the issue to deteriorate.
The economic issues about which the farmers are rightly angry must be addressed, but not as a reaction to illegal actions and midnight ultimatums. The disruption must stop. The Government must look separately, and without duress through threats from anyone, at the crisis facing farmers, especially beef farmers and those in less-favoured areas.
It has been estimated that farmers' incomes this year will drop by between 37 and 50 per cent. One commentator has described the industry as bleeding to death. Prices are sharply down on 12 months ago, and, even in the past seven days, prices have fallen dramatically—in some dairy herds they are lower than they were 17 years ago—from 89p per kilogram to 50p per kilogram. Farmers are selling some of their meat at a loss.
Interest rate rises by the Government have strengthened the pound, so we are sucking in imports at the expense of domestic produce, which is hitting our farmers. The Government could seek more compensation from the European Union, but they refuse to do so. They could use some of the rebate from the ewe premium underspend, but they refuse to do so. They could reinstate the hill livestock compensatory allowance—extra payments that the Conservative Government made to the tune of—60 million last year—but they refuse to do so.
The Secretary of State for Wales should be fighting his corner against the Ministry of Agriculture, Fisheries and Food and the Chancellor of the Exchequer. He either refuses to do so or has failed—whichever it is, it is dismal. Instead of concentrating on the siting of his beloved Welsh Assembly, he should concentrate on the urgent plight of his farmers.
Farmers' unions have condemned the illegal actions, but, at the same time, they want urgent talks with the Government. They want the crisis in farming to be addressed. They need help and support, and they need it now. The president of the National Farmers Union said—

Madam Speaker: Order. I have listened very carefully to what the hon. Member has said. Of course, I must give my decision without giving any reason. I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 24. I cannot therefore submit the application to the House.

Points of Order

Mr. Graham Brady: On a point of order, Madam Speaker. Was it in order for the Paymaster General to make a statement today on the replacement of the whole regime for saving, replacing the highly successful tax-exempt special savings accounts—TESSAs—and personal equity plans—PEPs—and to choose to do so outside the House? Is it perhaps possible that he is avoiding the Chamber so that he does not have to take questions on other matters which may embarrass him?

Madam Speaker: I understand that a Green Paper has been issued. It is perfectly in order for such a statement to be made outside the House. On other matters, I refer the hon. Gentleman to the reply that I gave yesterday.

Mr. Charles Kennedy: On a point of order, Madam Speaker. Further to your ruling in response to the application under Standing Order No. 24, may I seek your guidance? Although, understandably, the application was made by the Opposition Front-Bench spokesman on Wales—I notice that the Welsh Office Minister responsible for agriculture is present—many of us on both sides of the House and from all parts of the United Kingdom feel that the issues raised by the events in Wales go much broader and deeper than just what has happened in Wales.
That being so, and while acknowledging that many of the issues predate the present Government and cannot be divorced from the actions, decisions and track record of the Conservatives, all of us who are deeply concerned hope that you, Madam Speaker, might look favourably on an application for a Wednesday morning Adjournment debate, during which matters could be explored much more fully on a cross-party and cross-United Kingdom basis.

Madam Speaker: I would look very favourably on such a debate, but I have to tell the hon. Gentleman and the House that I do not select the subjects. That is done by ballot. However, the hon. Gentleman must get his application in tonight.

National Transport Safety

Mrs. Gwyneth Dunwoody: I beg to move,
That leave be given to bring in a Bill to create a National Transport Safety Authority.
The Bill is designed to create an authority to promote safety in all modes of transport, including aviation, rail, road and maritime; to investigate accidents and all safety-related occurrences; to report to Parliament annually; and to receive information on all related matters.
The reality of modern transport is that, overall, it is becoming safer, but every time there is a major accident of any kind in any form of public transport it attracts considerable attention and worries the travelling public, who want to feel completely confident in the method of travel that they have chosen. It is not only those of us who are especially interested in transport who feel like that.
After the Clapham and Cannon Street rail crashes caused fears about the age of rolling stock—which is a real concern to anyone watching what privatised companies are bringing back on to the rails—the whole question of safety was raised in the reports on both crashes. After Zeebrugge, the deficiencies in the design of roll-on roll-off ferries were very worrying. The marine engineers who gave evidence to the Transport Select Committee suggested that there was a good case for reconsidering the granting of safety licences to new types of ferry.
The Civil Aviation Authority was reluctant to introduce a system of inspection for foreign-registered aircraft when that subject was raised by Members. Concern is increasing about safety on London underground, especially as it is becoming so congested. The channel tunnel is governed not by normal safety procedures, but by a treaty, so the House does not receive reports that provide the level of detail that many of us feel we ought to receive. It must be clear from those examples that the public have real worries about the provision of safe transport.
It is also clear that there are many instances, even in the properly regulated safety authorities, of people acting as judge and jury in their own cases. Railtrack gave evidence to the Transport Committee last week, explaining that the part of Railtrack that was responsible for safety was independent. We were told that a Chinese wall existed between the two parts of the authority. I am of a suitable age to have grave reservations about organisations with Chinese walls between one part and another.
The time has now come for us to set up a national, independent—I emphasise independent—transport authority that would cover the whole range of transport facilities in this country. It already exists in embryo in certain organisations, such as the Civil Aviation Authority and the maritime authorities. A number of agencies could be combined into one large, independent unit that would investigate and report on problems; make the reports public, if necessary; and take advice and transmit it from some parts of the transport industry to others. The unit's role would be clear to the public.
The idea is not revolutionary, because it has already been done successfully in the United States of America, Canada, Sweden and elsewhere. We could benefit from


several aspects of those examples. The Canadian system, for example, provides the opportunity for people working in the transport industry to report, in confidence, any worrying aspect that they have discovered during their working lives. That opportunity is not restricted to workers in the industry.
Confidentiality is respected and it is possible to report to the safety authority any incidence of equipment not being properly used or some aspect of safety legislation that is not being operated correctly. Of course, personal grudges are carefully ruled out, but it is made clear that people reporting to the authority will have their cases taken seriously and that their names and involvement will not be disclosed without their agreement. If there are sufficient cases of misuse, or clear evidence in one case, that will be investigated. That does not happen in this country.
It is essential to have a national transport authority that seeks to improve safety at every level. It should not, as many of the agencies currently do, be only reactive: it should consciously offer support and help to all aspects of the transport industry. All areas of transport could benefit from the reports made by the safety authority. If other countries can do that successfully, we should follow their lead.
Such a move would also restore the public's confidence, given the true independence of the authority. How often do Members find themselves arguing with Ministers about inquiries into rail crashes, air crashes or ferry disasters? Individual Members often have to demand the publication of reports. If a national transport authority made an annual report to the House of Commons, the evidence would be available and the House could demand, in specific instances, that it be made public for the benefit of everyone with a specific involvement.
The time has come to demonstrate that although we appreciate and respect those working on safety in the various transport industries, a wholly independent agency would have more muscle, better support and an obvious transparency which is lacking at present. Because this is a Bill presented under the ten-minute rule, I would not dream of suggesting any monetary support for such an authority, but there are several ways in which we could set up such a unit and give it sufficient muscle to carry out its work.
I have great faith in the transport industry, those working in it and, above all, those who seek to regulate it, but that is no longer enough. The changes that have happened—including the privatisations, the pressures on ferry operators and the intense pressure on the national air traffic services—mean that we should have a national authority that stands outwith any of the existing structures. A national authority could ensure that it reported consistently and continually to Parliament, and could be seen to be doing its job. I believe that such an authority would be warmly supported by the general public.

Question put and agreed to.

Mr. Deputy Speaker (Sir Alan Haselhurst): Second Reading what day?

Mrs. Dunwoody: On 12 December, my birthday.
Bill ordered to be brought in by Mrs. Gwyneth Dunwoody, Mr. Brian H. Donohoe, Mr. Gwyn Prosser, Mr. Andrew Mackinlay, Kate Hoey, Mr. John Heppell and Mr. Nick Ainger.

NATIONAL TRANSPORT SAFETY

Mrs. Gwyneth Dunwoody accordingly presented a Bill to create a National Transport Safety Authority: And the same was read the First time; and ordered to be read a Second time on Friday 12 December, and to be printed [Bill 92].

Orders of the Day — European Communities (Amendment) Bill

Considered in Committee [Progress, 27 November].

SIR ALAN HASELHURST: [SIR ALAN HASELHURST in the Chair]

Clause 1

MEANING OF "THE TREATIES" AND "THE COMMUNITY TREATIES"

Amendment proposed [27 November]: No. 65, in page 1, line 12, at the end to insert the words
'but (for the avoidance of doubt) not Article 1 of the said Treaty.'—[Mr. Howard.]

Question again proposed, That the amendment be made.

The Chairman of Ways and Means (Sir Alan Haselhurst): I remind the Committee that with this we are taking the following amendments: No. 13, in page 1, line 13, after '(i)', insert
'Article 1 (other than paragraph 1)'.
No. 14, in page 1, line 13, after '(i)', insert
'Article 1 (other than paragraph 3)'.
No. 15, in page 1, line 13, after `(i)', insert
'Article 1 (other than paragraph 5)'.
No. 17, in page 1, line 13, after '(i)', insert
'Article 1 (other than paragraph 10)'.
No. 18, in page 1, line 13, after '(i)', insert
'Article 1 (other than paragraph 11)'.
No. 19, in page 1, line 13, after '(i)', insert
'Article 1 (other than paragraph 12)'.
No. 20, in page 1, line 13, after '(i)', insert
'Article 1 (other than paragraph 13)'.
No. 21, in page 1, line 13, after '(i)', insert
'Article 1 (other than paragraph 14)'.
No. 1, in page 1, line 13, after 'Articles', insert
'1, other than the words in paragraph 5, (Cm. 3780, page 9) "and through the establishment of economic and monetary union, ultimately including a single currency in accordance with the provisions of this Treaty".'.

New clause 30—Extension of jurisdiction of European Court of Justice: legal advice—
'.—This Act shall not come into force until Her Majesty's Government has obtained specific legal advice from the Attorney General setting out the extent to which the provisions on police and judicial co-operation in criminal matters in Article 1 para 11 of the Treaty of Amsterdam extend the jurisdiction of the European Court of Justice in the United Kingdom, such advice to form the basis of a report to each House of Parliament and to be subject to an affirmative resolution.'.

New clause 37—Relations between European Union and WEU—
'—The Government will not take any steps to foster relations between the European Union and the WEU with the view to the possibility of the integration of the WEU into the Union,

as contemplated by Article 1, paragraph 10 [Article J.7] of the Treaty of Amsterdam, without first tabling a motion in each House of Parliament which shall be subject to affirmative resolution.'.

New clause 38—Common foreign and security policy—
'—The Government shall not take any steps to participate in the decision making arrangements as set out in Article 1 paragraph 10 [Article J.13 1 and 2] of the Treaty of Amsterdam, without first tabling a motion in each House of Parliament which shall be subject to affirmative resolution.'.

Mr. John Bercow: There is a real concern among Conservative Members that article F.1 of the treaty of Amsterdam is a device conjured up by supporters of European federalism to end the use of the national veto. To date, that real concern has been met by Ministers with a mixture of faint puzzlement and lofty disdain. Clearly, they do not comprehend our concern.
The Minister will, I hope, recall that I promised him last week three examples which illustrate the basis of our concern. I had time to offer him two; I would like simply to conclude by providing the third. The two with which I dealt last week related to the minimum wage and to the possibility of a conflict between the attitude of other member states to the age of consent with that of the United Kingdom.
The third example which I offer for the Minister's consideration is that of strikes in essential services. Let us suppose, for example, that a future Government were to decide to outlaw strikes in essential services. My concern—shared by a number of my right hon. and hon. Friends—is that under article F.1 of the treaty of Amsterdam, there is a danger that we could be had up by the institutions of the Community on the ground that we had breached a fundamental right or freedom. That concern is exacerbated or reinforced by the reference in article 1 to the
Fundamental Social Rights of Workers.
Is there not a danger that that wording and that article could be used as an excuse to take action against this country and to strip it of its voting rights if its Government were to opt to ban strikes in essential services? Has the Minister considered the point? Has he obtained a guarantee from other member states that the article will not be invoked in that way? Can he say? Does he know? Will he share his view with us?
Silence is no longer an option. We must have answers. I respect the fact that the Minister genuinely does not believe that this problem will arise—my anxiety is that it might. A prudent Government must guard against the possibility of that problem arising. The problem will not go away. It cannot be wished away. It cannot be pretended out of existence. I respectfully ask the Minister to take account of our concern and to seek to respond to it. I have no doubt that other right hon. and hon. Members will reiterate the concern during the debate. I ask him to respond to them and, in the first instance, to me.

Mr. Kenneth Clarke: This debate has run on for some time, and I have sat through quite a lot of it. I read the remainder of the debate—which, unfortunately, I had to miss—before this debate restarted. I propose to make a short speech, as we have gone on for some hours.
I note that I was quoted earlier—I think with approval—as having said that I did not think there was any great reason to get very excited about the treaty of


Amsterdam, which did not seem to me to have made any fundamental changes. Indeed, I was rather disappointed by the treaty of Amsterdam. Certainly, there are people on the continent of Europe—who, no doubt, are more pro-European than me—who think that the outcome of the proceedings at Amsterdam was a triumph for British caution at the expense of those who wish to go for European integration at a faster rate.
I have always thought that it was a mistake to insert in the treaty of Maastricht a binding commitment to hold an intergovernmental conference at a set time. The aftermath of Maastricht showed the great dangers that Governments in Europe faced in trying to go for great institutional reform ahead of public opinion. A certain flexibility in the timing of the inevitably necessary intergovernmental conferences might have been of value.
I voted against the Second Reading of this Bill because I have two great objections to the treaty of Amsterdam. First, it contains references to the agreement at Amsterdam that we would accept the social chapter and waive the opt-out negotiated so carefully by the previous Government. Secondly, I do not believe that Amsterdam remotely faced up to the problems of enlargement. It was so unsatisfactory for those of us who attach great importance to the enlargement of the Union to include more and more countries from central Europe. The result is that a great deal of business is left undone.
I would like to make a full speech about the social chapter, but I have made my views clear on many occasions. I simply wish to record that I think that subsequent generations will bitterly regret that we exposed ourselves to the risk of introducing into the British economy provisions on labour market regulation which might increase the cost of employment in this country. We derive considerable advantage from the opt-out negotiated by my right hon. Friend the Member for Huntingdon (Mr. Major) at Maastricht. It has been one of the marked differences between the British and the European economies in recent years.
We have been able to combine strong economic growth with the creation of new employment. The principal reasons for the tragically high levels of unemployment across the remainder of the continent, in my opinion, remain the inflexibility of labour markets there and the inheritance of social legislation which causes great difficulties when the prospect of new jobs arises.
By waiving the British opt-out from the social chapter, the British Government have done a great disservice to many people in other member states. The climate of opinion was steadily moving in our direction across Europe. I encountered many German, French, Spanish and Italian employers who agreed that the British model was better for the creation of employment, and that the burden of social legislation—which, in most cases, had been implemented by their national Governments, although some was implemented as a result of European directives—was a serious disadvantage to them.
The argument was going our way, and I am afraid that the British accession to the social chapter is likely—for a short time, at least—to give a fresh breath of confidence to all those who adhere to an older model of how an employment market should be regulated. We will have difficulty in fighting off Padraig Flynn and his directorate

as fresh proposals are made, because it is believed that we are back on the old agenda which ought to be discredited—that social legislation is somehow the way of providing more security in employment to people in the modern world.
My second objection is that Amsterdam failed to tackle the problems of enlargement. As I have said, I think that the enlargement of the Union is one of the great objectives for European politicians in the next few years. The most dramatic events of my political life—the first was before I came to this House—were the erection of the Berlin wall, which symbolised all that was worst about the division of Europe, followed by the moment I never expected to live to see; the demolition of the Berlin wall by the citizens of Germany, symbolising the end to the division of Europe.
As the European Union is one of the ways in which we strengthen our commitment to liberal democracy, human rights, the free market economy and the principles that we hold dear, the sooner we reinforce the reunification of Europe by admitting into the EU those countries in central and eastern Europe which steadily become ready for it, the better.
We cannot simply enlarge the present Union without tackling serious policy and institutional problems. Policy problems are to be dealt with under a separate heading. It is plainly necessary to reform the structural funds and the common agricultural policy.
I strongly support the German, Dutch and other politicians who say that, when enlargement is attained, the enlarged Community should have a budget limited to 1.27 per cent. of gross domestic product, as at present. That accelerates the need for reforms that were in any case desirable in the interests of the present members of the Union. That matter will be addressed at another time.
Institutional change has to be made, touching on the size of the Commission, weighted voting for majority voting, and other matters that we shall have to return to at an intergovernmental conference. I voted against Second Reading because I object to the social chapter, and I am disappointed by the outcome on institutional reform.

Mr. Roger Casale: The right hon. and learned Gentleman mentioned the importance of human rights in the context of European integration and enlargement to include eastern and central Europe. Does he agree with the shadow Foreign Secretary, who objected to the way in which human rights clauses were to be incorporated, referring especially to the importance of procedures for triggering sanctions in cases of human rights abuse? Surely it is crucial that, when we enlarge to include countries in central and eastern Europe, we anchor those countries' commitment to human rights.

Mr. Clarke: I intended to comment on that, so I am happy to do so in response to the hon. Gentleman. I listened to my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) last week, and I entirely share his commitment to human rights, in every ordinary sense of that phrase. He went out of his way to emphasise the fact that no one in the Conservative party challenges the principles of human rights, the need to protect individual liberty and free speech, and the right to demonstrate, to have parliamentary democracy and to be governed by the rule of law. There is no division in our party on those principles.
I agree that, as the Community is enlarged, we must consider what happens if any member state acquires a Government who fall short of those fundamental standards. That involves not only new members. One of the reasons why we admitted Greece was to reinforce the change that had taken place there, with a return to parliamentary democracy and a proper standard of human rights.
We have never known what would happen if, tragically, the Greek colonels were to return to power, or if some military regime were to take over in the Iberian peninsula. The idea of that happening in Portugal or Spain may be utterly fanciful these days, but it is legitimate for the treaty to consider the possibility.
If we enlarge into eastern and central Europe, where the tradition of stable democracy is hardly well established, some protection will be required. I believe that article F.1 is an acceptable part of the treaty. My right hon. and learned Friend shared my analysis but suggested that the matter should be tackled in some other way. As I understand it, he objected to the treaty rights of a member state being taken away if it remained subject to the treaty obligations, but I can envisage that being an attractive response.
I do not see why, if a military regime has taken over a country in eastern or central Europe, it should be released from the obligations, or why we should sever our trading contracts and the policing of those contracts by the European Court, simply because we disapprove of the Government; but I would strongly object to a Government who were not respecting human rights casting votes at the Council of Ministers, and perhaps blocking action, when vetoes were the order of the day, without effective action being taken to stop them.
It is difficult to say with certainty that the procedures will ever be invoked, because every relevant situation that arises will in itself be a political crisis, and will have to be responded to according to the facts of the case, but I personally have no objection to article F.1.
The fear is raised that the article might be totally abused, to remove the veto of the Government of a member state with a satisfactory record on human rights, but with some peculiar social provision that could be described as a breach of human rights. Anything is possible in international relations, and in debates on the treaty of Rome, the Single European Act 1985, and the treaty of Maastricht, I have heard some pretty fanciful suggestions about what might occur, but the provisions of the treaty envisage the clause being invoked only by the unanimous vote of all member states, except the one whose conduct is under examination, ratified by two thirds of the Members of the European Parliament.
5.45 pm
There is nothing in the treaty that allows me to turn to my hon. Friend the Member for Buckingham (Mr. Bercow) and say that what he fears is absolutely legally impossible, but when I consider the dangers of having a military regime inside the Union at some time in the future, I am prepared to say, as a matter of political judgment, that I do not think that anyone will deprive the United Kingdom of all its voting rights and leave it bound by the treaty obligations because, in the opinion of the heads of state of 14 other member countries, our refusal of the right to abortion on demand, or some such matter, is a breach of human rights.
One must consider the risks in both directions, and I personally share the alarm of those who were at Amsterdam about the lack of any provision in the event—again, we hope that it will never happen—of some member state being governed by a regime that is in breach of fundamental human rights.

Mr. Robert Jackson: It has been suggested that it would be preferable to expel a member state rather than suspend it in those conditions. Does my right hon. and learned Friend agree that the legal complexities, and the consequences and ramifications, of expulsion of a member state, including the suspension of contracts and the possibility of actions arising therefrom, would be so great that, in effect, the sanction would become a useless deterrent, whereas a suspension in the conditions that he has described would provide a relatively effective redress?

Mr. Clarke: I am inclined to agree with my hon. Friend. In practice, if some military regime seized power and started abusing human rights, article F.1 might not be the end of the story. The European Union could not tolerate the situation indefinitely.
My right hon. and learned Friend the shadow Foreign Secretary suggested that the proper course would be expulsion, but I agree with my hon. Friend the Member for Wantage (Mr. Jackson) that we would then have to consider whether to sever trading relations or renegotiate them and what would happen to existing contracts, and so on. I understand the fears about the article, but they do not seem to me to be totally credible.
The European Court of Justice always causes a certain agitation in the House. I was glad to hear my right hon. and learned Friend the shadow Foreign Secretary and my hon. Friend the Member for Stone (Mr. Cash) confirming that the European Union needs a strong and effective court of justice. It is impossible to have a single market in the European Union, with trading taking place on a fair basis, with the nations subject to the same obligations and specifications, including open access to markets and freedom from state subsidy—all of which we want—if there is absolutely no means of enforcing the rules.
In Britain, we labour under what I believe is a slightly exaggerated notion that we are the only ones who obey any of the rules, and that they are systematically broken throughout the rest of Europe. That perspective can be taken only on this side of the channel, but we do, indeed, bind ourselves by the rule of law and our treaty obligations, and we are entitled to expect that those in other states will do likewise. That is why we in this country go to the European Court of Justice with such persistence, and that is why we win most of our cases when we do so. That is why we shall have no redress against complaints of unfair trading, breach of treaty obligation and so on if the European Court of Justice is diminished. On that, I trust, we are now all agreed.
I shall not discuss specific judgments. In my surgery, I frequently meet disappointed litigants whose confidence in British justice has momentarily dropped because, unfortunately, they have lost a case before the High Court of Justice or the Crown court. I always listen with great sympathy. They are usually going to the Queen, they are going to the Pope after that and they are usually going to the European Court of Human Rights to get a finding of fact reversed. Recently, we lost one or two cases that I,


as a Minister, was anxious for us to pursue, but I do not judge a court on the basis of whether we have won every action there. On the whole, we have used the European Court of Justice to considerable advantage.

Mr. William Cash: Will my right hon. and learned Friend give way?

Mr. Clarke: No. I see that I am in danger of being drawn into the details of individual litigation. I will do that on another occasion.

Mr. Cash: rose—

Mr. Clarke: All right—I give way just once.

Mr. Cash: Does my right hon. and learned Friend concede that, although some of us accept the idea of a court of justice with limited functions, objections are made to the expansion of the court not only because it tends to go into judicial—and even political—activism, but because the functions that have been conferred on it under the process of continuing treaties, in the continuous rush towards ever closer union, are creating a situation in which the court is becoming a supranational body with power over areas of governmental activities, including economic and monetary union? That is the problem that many of us have with the European Court of Justice. If its powers were more limited, it would be more acceptable.

Mr. Clarke: I do not agree with that. We use the European Court of Justice and it seeks to reach its decisions judicially.
I will not be drawn into my full comments on the European Court of Justice. One of the dangers that makes all the court's judgments unpredictable is that it is usually required to interpret treaties, regulations and directives that have been somewhat carelessly drafted.
The decision-making process in Europe has been experienced by quite a few of my right hon. Friends, and it is less than perfect. I have probably taken part in more Councils than most people still alive, and I am used to late-night decisions being taken on texts, hurriedly exchanged between officials, looked at by Ministers and wrangled over in the Council. Anything that gets agreement is published, on the basis that it will be sorted out later. All too often it winds up before the judiciary in the European Court of Justice, who are expected to give some expression of what the draftsman of the regulation intended. As, at the time, different Ministers went out of the meeting and addressed their national press, each claiming that they had achieved a totally different type of triumph at the expense of the other, that can be difficult to resolve. That lies at the root of most of the problems.
The idea that the court is supranational has always been established and was accepted as part of our membership. It has been known for 25 years—ever since we entered the European Union—that legislation of individual national Parliaments can be set aside if it is inconsistent with a judgment of the European Court. I remember it being fiercely debated for days on end in the House of Commons soon after I entered the House. The idea that we supposed that we were entering only a trading arrangement is one of the great myths of our time.
I believe that the European Court serves its purpose quite well. The British win more cases than we lose there. We should use it more often in future. However, I strongly agree with the points that my right hon. and learned Friend the shadow Foreign Secretary made about our proposals for the European Court of Justice.
In my views on the European Union, I am not a starry-eyed idealist; I have seen it at far too close quarters for that. There are countless defects, not only in the decision-making process but in many of its institutions. The previous Government carefully prepared a lot of propositions for improving the workings of the European Court of Justice and protecting all member states against judgments that could have horrendous implications.
We wanted to limit the retrospective nature of judgments. As Chancellor of the Exchequer, I was extremely worried about the constant challenges that were made at the European Court to the scope and incidence of our VAT because, whereas in this country we have imposed limits on how far back in time such claims may extend, in the European Court, judgments might be awarded undoing the imposition of VAT all the way back to the introduction of VAT. Several countries risked billions of pounds of damages.
We also wanted to introduce a principle that member states were liable for compensation only in cases of serious and manifest breaches of their obligations.
We wanted national time limits to be respected when people brought actions before the European Court. That was not Euro-sceptic or Europhile. It was an extremely constructive approach to improving the workings of the European Court. It is no good dismissing what my right hon. and learned Friend the shadow Foreign Secretary said as though it was a frontal attack on the European Court; it plainly was not. Astonishingly, the new British Government, who I trust were advised—we cannot inquire about their advice—about the point of all those changes, appear to have abandoned them when they reached Amsterdam.
We had allies on that point. I may have had a biased view because I was attending ECOFIN, but I assure the House that Finance Ministers were rather enthusiastic about limiting the scope of the court's judgments. We have never had a satisfactory explanation of why those arguments were not pressed. I believe that those objectives could have been attained and it is a serious weakness that none of the arguments was advanced.
I understand the concern that my right hon. and learned Friend the shadow Foreign Secretary has about the ECJ and the home affairs pillar. I agree with him that the pillared approach of Maastricht was one of the best features of the Maastricht negotiation. In my opinion, the only proper way to proceed on foreign affairs and security and on home affairs was on the basis of intergovernmental co-operation and not using the institutions of the European Union. That was the best feature of the Maastricht treaty; it has led to some progress, and I would defend the pillared approach.
The pillared approach appears to have been encroached on marginally by giving the ECJ some jurisdiction in that area. If there are conventions and so on under the home affairs limb, it is necessary for someone to resolve disputes about their meaning, but we should be very cautious about the implications, and I trust that the jurisdiction of the ECJ will not be extended further into other pillared areas.
The failures at Amsterdam included not only the apparent adoption of the social chapter by everyone, but the failure to make any proper institutional reform. The Government failed to get any progress on what the weighting of individual member countries' votes would be in weighted majority voting. I have long believed strongly that qualified majority voting cannot continue on the present basis, whereby votes in an electoral college are given to individual member states rather arbitrarily, in a way that bears no relationship to their population.
That matter was raised by my right hon. Friend the former Prime Minister during the Greek presidency. When he returned to the United Kingdom, he took a lot of abuse for raising it. He was obliged to accept that the matter would be postponed until the Amsterdam conference so that we could not be accused of excluding the Scandinavians and others from membership; and then nothing was done at Amsterdam.
The bigger the European Community gets, the more necessary it becomes for states like our own to ensure that any risk of QMV is based on a weighting of votes that reflects the position of individual member states. The present voting system gives rise to the possibility that small states will be given overweening power; that position is not sustainable. We are drifting towards a situation where, if many more states enter the European Union, we might have Germany, Britain and France, or Germany and Britain, or Germany, Britain and Italy voting together and being voted down by the combined weight of all the other member states, despite the fact that, in population terms, nothing like an adequate majority had been achieved.
We must address the size of the Commission, which is far too big. It is absurd. If the Community gets bigger—for example, if we take in micro-states such as Malta if the Maltese resume their application—we cannot have a Commissioner from every member state. We should not have two Commissioners from the bigger states. We should have rotation between states with the right to nominate Commissioners.
People complain about the overweening power of the Commission; I believe that the power of the Commission is waning. The power of the Delors Commission will turn out with hindsight to have been the high watermark of the Commission. We are moving to a Union based more on the power of the Council of Ministers, subject to the democratic checks of the European Parliament and national Parliaments.
The problem is that the more Commissioners there are, the more they try to do. There is the continual attempt to extend their competence and jurisdiction to areas where subsidiarity should prevail. That problem should have been tackled at Amsterdam; it will have to be tackled again.
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I realise that many of the speeches by my colleagues in the debate have not always taken exactly the same approach as mine—[Laughter.]— although I have shown that there is quite a lot of common ground between us. Listening to the concluding remarks of my hon. Friend the Member for Buckingham, I realised that he remains concerned about this commitment to an ever closer Union, which appears again in the article under discussion, as amended. I have already made it clear that the European

Union has for 25 years been a political as well as an economic endeavour. This House committed itself to ever closer union in the debates that I attended in 1972, when the implications were debated at inordinate length.
The process of ever closer union will continue, but it is a mistake to think that that means a united states of Europe, or that it is a threat to the power of the nation state. A united states of Europe is no longer contemplated by any of the members of the EU. 1 remember in my younger days meeting the founders of the Union, who actually believed in the blueprint: the Commission would become a European Government, the Council of Ministers would be a senate, and the European Parliament would be the European House of Commons. I believe it was that idea to which my right hon. Friend Baroness Thatcher emphatically said, "No, no, no." If my recollection is right, I say no, no, no to that too. It is a dead blueprint; no one pursues it any longer.
Since we joined in 1972 when all these fears were first raised, in my judgment this country has become a more powerful nation state and more respected around the world, with more influence than it formerly had. We have built on our membership of the Union and have become a more successful and self-confident nation. But we live in the modern world, where the political interdependence of nation states will grow ever stronger; where the power of each and every nation state in Europe will increasingly depend on our ability to act collectively; where we have common interests that reinforce our influence; and where our economies are going to become ever more integrated whatever Governments want, or do not want, to do about it. We are moving into a free trade, integrated global economy—and I welcome that.
What we need to retain—and what the Government are losing—is influence over the direction of this process. If we detach ourselves too much from what is going on, we shall lose our influence on the environment in which our political power and economic well-being can flourish. I read of the Chancellor's dismay at the fact that the other member states propose to proceed with an informal Council of Economic Ministers and may not let him attend. I share the Chancellor's view; I spent my time arguing with colleagues on ECOFIN that such a Council should not be created. I am not surprised, however, that the right hon. Gentleman has failed. Once he had made his statement that was supposed to clarify his approach to economic and monetary union; once it was obvious that he had done no such thing; once it was obvious that he had put off making any definitive decision, because hard choices are what the Government talk about but do not make readily; once all this had happened, I could sense the influence of the Chancellor weakening when he returned to Europe. He cannot ask to sit on the new informal Council and influence its decisions but also say that he has to go back and consult Alastair Campbell, Rupert Murdoch and perhaps even the Prime Minister to find out whether he can seriously commit this country to joining once the economic conditions are right.
This is an illustration of how, if we do not take clear decisions based on hard choices, when the circumstances eventually are right, British influence will be damaged. I do not say that it will be damaged by Amsterdam, which is a mouse of a treaty compared with what the people who first thought of the IGC intended. It has some good and some bad features. Among the latter was the failure to get the right deal on the European Court. I strongly agreed


with the criticisms in that respect levelled by my right hon. and learned Friend the Member for Folkestone and Hythe.

Several hon. Members: rose—

The Chairman: Order. I should like to assist the Committee. This is a wide grouping of amendments, but it is not infinitely wide. I sense that the Committee is in danger of repeating the Second Reading debate, which would be out of order. I remind hon. Members that there is a debate arranged for Thursday, when it will be possible to roam far and wide on the subject of the European Union.
The other danger is that some of the speeches already made on this group of amendments are more pertinent to later groups. That will obviously influence the attitude of the Chair to the length of those future debates. I would therefore ask the Committee to bear it in mind that I have tried in my selection of amendments to allow every aspect of the Bill to be discussed in an orderly manner; and it would assist the flow of debate if the Committee kept strictly within the terms of each group of amendments.

Mr. David Prior: I am and always have been a pro-European. I have worked in almost every country in Europe; I have bought and sold products in every country in Europe; and I have run a business in Germany. I believe in free trade, in breaking down tariff barriers and in removing state aids, but we have a long way to go in practice before we can genuinely say that we have created a single market in Europe.
One has only to look at a set of Italian accounts, or to try to sell a product in southern Italy, to know that we have a long way to go before we reach a true single market. It is because I am pro-Europe that I am opposed to article 1 of the treaty of Amsterdam, and opposed to the monetary union foreshadowed in it.
I agree with my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) that the treaty of Amsterdam marks
an unnecessary move towards further integration of the European Union. It contains a series of measures that transfer power to Brussels from the national parliaments".—[Official Report, 27 November 1997; Vol. 301, c. 1138.].
The treaty raises two issues that go to the heart of the European question. First: is the Conservative vision of Europe as a community of independent states compatible with the treaty and with monetary union, or is the treaty compatible only with the Government's vision of a Europe of the regions? Secondly: is the economic and industrial playing field being created in Europe, inspired as it is by a corporatist and dirigiste ethic, good enough to be competitive with north America and Asia in the future?
I shall deal with the first point first. The Conservatives have always focused on trade. Whether it was the European Coal and Steel Community, the Common Market or the Single European Act, our focus has been on trade—although I agree with my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) that there has always been a political dimension to Europe as well—but we in this country have not stressed that dimension as much as we should have for the purposes of a truly fair

public debate. Indeed, we have played down the loss of sovereignty inherent in the moves afoot in Europe. Under this treaty, with the extension of qualified majority voting, the increased powers of the ECJ and the foreshadowing of a common defence and foreign policy, the political aspects of Europe become more explicit.
I believe that we are arriving at a watershed. No longer can we pretend to our constituents that Europe is solely about trade, because it is not. We must be more honest and accept that there is a sizeable political dimension to our continued involvement in Europe.

Mr. Ian Taylor: My hon. Friend is right to say that the politics may not have been stressed enough in public debates, but one of the key achievements of Margaret Thatcher as Prime Minister was her realisation that qualified majority voting was essential in the about-to-be created single market to overcome the protectionist instincts of any one nation. She realised that it was vital to Europe's wider interests that there be no national veto in the single market—which I am sure is why my hon. Friend the Member for Stone (Mr. Cash) voted in favour of the Single European Act.

Mr. Prior: I, too, am in favour of the Single European Act, but when the Chancellor of the Exchequer says that monetary union will involve some pooling of economic sovereignty, that statement is disingenuous. I believe that monetary union goes beyond that. That view is not necessarily wrong, as I accept that there are different views on Europe, but monetary union goes way beyond some pooling of economic sovereignty.
The combination of Amsterdam and monetary union provides the basis for a single European state, and that is what the debate should be about. Although my personal views are against that, it is the nub of the issue that we should be debating. It would be a tragedy if, in the discussions on monetary union, we were diverted into a narrow debate about convergence criteria, and so on. We would be doing the public a great disservice.
Nothing could be more dangerous to this country than if the British public went into closer political union without fully understanding the facts, and that is what they are doing. In those circumstances, political union would unquestionably be damaging to Europe.
My second point is the economic one. In 1972, when we joined the Common Market, the continental systems had performed extremely well for 20 years. There is no doubt that, despite the high levels of state ownership and the more dirigiste approach to managing their economies, they were extremely successful That was before the general agreement on tariffs and trade had largely opened up free trade, before the globalisation of business and the capital markets, and at a time when the western economies were still pre-eminent technologically.
That has changed. Over that period, America has re-emerged as probably the great dynamic economy in the west. The UK's economy, as well, was transformed during the 1980s and 1990s. I would be the last person to write off the continental economies. No one who has seen Germany, France and Italy would dream of doing that; they still have very strong engineering and manufacturing bases. Nevertheless, to tie ourselves irrevocably into the continental social system at this time could prove to be a great mistake.
On both political and economic grounds, this is a bad treaty. It is a clear departure from the popular notion—albeit not the notion inside the House of Commons—that the EU is first and foremost about trade. Lastly, it will make Europe a more difficult place in which to do business.

Mr. Desmond Swayne: At the Committee's previous sitting, the hon. Member for Harlow (Mr. Rammell), who unfortunately is not in his place, suggested that the defeat that the Conservatives suffered on 1 May was a consequence of the events of September 1992, and our inability to control our interest rate in what he called
a global international currency situation."—[Official Report, 27 November 1997; Vol. 301, c. 1169.]
In some respects, I agree with the hon. Gentleman, but I want Labour Members to consider what would have happened if, instead of entering an exchange rate mechanism, we had been bound into a full currency union, and therefore were unable to take the escape route that we took—unable to reduce interest rates and make the best of the remaining four to five years to bring about an astonishing recovery. Had that not been possible, what vengeance might the electorate have wreaked? Perhaps Labour Members might learn from that experience.
The hon. Member for Harlow went on to complain about the sentiments expressed by the Opposition, which he called "xenophobic rhetoric". I do not know how tightly one should define the word "xenophobic", but it was not my experience that the arguments advanced by Conservative Members were xenophobic in any sense. However, the hon. Gentleman is a reasonable man, and if he wishes to call such sentiment xenophobic, that is his right, although we would disagree.
The hon. Member for Harlow may not have realised how grave an accusation he made, as the treaty goes some way towards outlawing such sentiments. The hon. Gentleman may believe that the sentiments expressed were xenophobic, but I am sure that he would also believe that we have every right to express them. That is not a point of view consistent with the treaty. Labour Members should consider voting for amendment No. 65 on precisely that ground.

Mr. Bercow: Does my hon. Friend recall that, when the hon. Member for Harlow (Mr. Rammell) was invited to cite a single example of a xenophobic statement during the Committee's deliberations, he could not produce an example?

Mr. Swayne: I thank my hon. Friend, as I had indeed forgotten that. It is pertinent that I should be reminded.
I draw the attention of the Committee to article 1 of the treaty, which replaces article B of the Maastricht treaty. It states:
The Union shall set itself the following objectives:".
I draw particular attention to the fourth objective:
To maintain and develop the Union as an area of freedom, security and justice, in which the free movement of persons is assured in conjunction with appropriate measures with respect to external border controls, asylum, immigration and the prevention and combating of crime.

Attention has perhaps rightly focused on the abolition of border controls and the so-called flanking measures, whatever they might be. The United Kingdom, of course, has an opt-out, as is made clear in the protocols. Despite that, I find it difficult to believe that we will escape being drawn into some centralised process of interference in our administration of justice and law.
That is precisely because of further provisions. I draw the attention of the Committee to article K.1, which states:
Without prejudice to the powers of the European Community, the Union's objective shall be to provide citizens with a high level of safety within an area of freedom, security and justice by developing common action among the Member States in the fields of police and judicial cooperation in criminal matters and by preventing and combating racism and xenophobia.
Now we realise the gravity of the accusation made by the hon. Member for Harlow. How long will it be before my hon. Friend the Member for Stone (Mr. Cash) is arraigned before some court for xenophobia? How long will the teaching of history in our schools be secure from those who would revise it and interfere with it to exclude xenophobic tendencies?
The most important question is what on earth that has to do with a treaty that deals with the development of Europe along the lines that the Government have suggested. Where is the need for common action among all the member states on such activity? Why is that not left to individual member states? What became of the principle of subsidiarity?
The answer is in the treaty. The fifth objective set out in article 1 makes it clear what the attitude to subsidiarity shall be henceforth. It will be
to maintain in full the aquis communautaire and build on it with a view to considering to what extent the policies and forms of cooperation introduced by this Treaty may need to be revised
That is as far as we seem to be able to go on subsidiarity.
We are talking not of bland statements or of flowery words. Instead, we are dealing with legal documents, which will be interpreted as such. They must, therefore, be tightly defined and coded.
There is a great danger that the treaty creates a means by which the European Court of Justice—certainly article K.2 is fully justiciable before the ECJ—can extend its jurisdiction into the administration of criminal and civil law in the United Kingdom. That is precisely the process that took place in the United States with the 14th amendment after the civil war, which required that the states give equal protection to citizens under the law. That was an entirely unobjectionable amendment, but it gave the federal supreme court the ability to exercise huge jurisdiction over state law. It led to a great advance in federal achievement in the United States. That is fine if one is looking for that sort of development in Europe.
The article calls for an area of freedom and justice that affords a high level of safety and protection to the citizen, and I fear that it will create the 14th amendment for the European Union. I urge the Committee to vote for amendment No. 65.

Mr. Howard Flight: The debate is important because it does not turn on a small, minor item that the approval of the treaty of Amsterdam represents. As my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) said, we are talking of a step down the path towards European integration.
It is interesting that no one is clear about the form of political integration. Will it be the United States federal model or a relatively undemocratic model that is run by the Commission? As my right hon. and learned Friend suggested, will it be a new model that will activate the power of the European Parliament? It is clear that we have reached a significant stage.
The treaty provides for universal, including British, membership of the social charter. As my hon. Friend the Member for New Forest, West (Mr. Swayne) said, the extension of powers to the European Court of Justice gives the potential power of veto over United Kingdom criminal law as well as creating the framework for a European model of the United States supreme court. The harmonisation of civil law must mean for citizens of the United Kingdom the erosion of UK common law. The progressive framing of a common defence policy, wherever that leads, is, self-evidently about attempts to pull together European defence activities.
Included also is the introduction of citizenship of the Union. As we know, everything to which I have referred is accompanied by other outside measures involving tax harmonisation.
Right hon. and hon. Members may claim that the House of Commons has known that Britain embarked a long while ago on the course of integration into a European state of some sort, which must mean inevitably the ending of the nation state as we have known it. It is clear, however, that the nation has scant awareness of that process. That leads me to ask why there is hiding and deceit. Why is it pretended that the treaty represents a little something that does not matter much? Why is it that the newspapers and other sectors of the media do not more clearly bring to the attention of the British public the fact that we are faced with a sequential stage? I am understanding of those who wish that to be, but it is astonishing that the citizens of the United Kingdom do not understand that that is what it is all about and that that is the path down which we are going.
I warn the Government and others who wish to advance down the path to which I have referred that, because citizens do not understand and have not been fully educated, there will be a major nationalistic backlash, when they suddenly realise where the treaty is leading us. We shall then be locked up in xenophobia.
The provision for a single currency is crucial. The other issues on which I have touched can ultimately be abrogated by a future United Kingdom Government, but inclusion of sterling in a single currency would be much more difficult to reverse than other processes.
It is still a controversial issue with some that a single currency is clearly to be accompanied by the harmonisation of taxation. We are all to sign a code committing ourselves to such harmonisation and it is inconceivable for any major currency—a fiat paper currency—not to have the backing of some form of single state. It would be impossible ultimately to pledge the assets of such an area, or even to manage that currency in the event of a major crisis, without there being at the back of it the concept of a single sovereign state.
Cross-subsidies would not be possible to organise without central power in some form of a single state. The two issues to which I have referred go hand in hand.

It is not a matter of Ireland having been able to have its punt managed in line with sterling in the past. After all, Ireland is a very small economy.
I wish to focus on the economic arguments. It is self-evident that a single currency means the loss of ability to manage our own interest rates. There will be the loss of an independent exchange rate. As I have said, powers will be lost to pursue tax policies and tax rates.
Let us think of an economy that is facing serious problems. Let us consider the problems that are likely to spread round the world because of what is going on in Asia. The individual Governments of the surviving nation states in Europe will have lost virtually any individual power to manage their own affairs. That seems likely to cause major political problems and major nationalistic reactions.
I move on to the case study analogy of united Germany. Much has been said about the reunification of Germany, but there are some crucial points to bear in mind. Two economies have been put together—east and west—with entirely different capital stocks, work habits and skills. The east of Germany has on average a productivity level that is about 35 per cent. below that of western Germany. The rate at which things started does not matter because that represented about the value of east German savings.
I predicted at the time that German firms would be looking to Czechia, Hungary and Poland for investment, not to eastern Germany. Indeed, they looked to Britain as well. What has happened to eastern Germany? The answer is virtually permanent stagnation. It cannot compete with economies with much cheaper currencies to the east. It cannot compete either with the superior west German economy. That is what is happening in one country with one language with a fair degree of labour mobility. At the same time there is a major fiscal burden on the west German economy in subsidising the east German economy.
My fear is that one can apply that case study Europewide. Anyone who believes that a single currency can be operated without an increase in cross-subsidisation is living in a world not of this planet. From where is the cross-subsidisation to be raised? Who will pay for it? Who will take the political decisions? I cannot see any Government winning an election here or in Germany on a ticket of putting up taxes to give greater cross-subsidisation to Italy, Spain, Greece, east Germany, or wherever. I fear that a substantial undemocratic element will be involved.

Sir Raymond Whitney: Do my hon. Friend's concerns, which, on the whole, I do not share, about the possibility of Britain joining the single currency lead him to conclude that we should never in any circumstances join a single currency union, whatever the impact on Britain, because of the fundamental objections that he sees? Therefore, it is not a question of postponing a decision for five years, 10 years, or whatever; it is a question of saying never.

Mr. Flight: Clearly, joining the single currency means surrendering the existence of the country as a nation state. It means giving up a considerable amount. If we are to give up such an amount, the argument has to be


powerfully in favour economically. I assert that the argument is, if anything, negative economically. It is certainly negative in terms of economic cycles being out of sync and, if anything, becoming more so. If one is to sell one's birthright, do not sell it for an economic mess of pottage. It is worth selling only if there are economic gains to be had.

Mr. Ian Taylor: My hon. Friend has raised an interesting point. If not for a mess of pottage, for what would he sell his birthright?

Mr. Flight: Like all Conservatives, I am ultimately a pragmatic person. Who knows what the circumstances will be in the future? There is no case for selling our birthright in the immediate future. One of the things that has most worried me is that the provisions of the Maastricht treaty for coming together are a completely wrong measure of the economic homogeneity that is needed for a common currency to work.
Even America, since the civil war, has had the problem that the deep south—anyone who has been there will know this—has remained a relatively depressed area. It was a backward plantation economy and has never really got off the ground.

Mr. David Curry: Georgia?

Mr. Flight: The deep south, Sir. Certainly not Georgia, which is the mid-south.
The issue is that, if economic regions that are insufficiently economically homogenous are put together, it will cause major problems. The less successful areas will become worse. One then has to choose whether to subsidise them. If not, unemployment will rise on a massive scale. Considering when or whether this country should sell its birthright is a serious issue. The Maastricht criteria are by no means a measure of adequate economic homogeneity.
The second crucial point that I wish to make was made substantially by my right hon. and learned Friend the Member for Rushcliffe. Does the single currency encourage or discourage areas of Europe to adapt their economies towards economic success, towards competing with the new emerging parts of the world, towards the new world of free trade and free global flows? I do not see any evidence of that whatever.
For nearly a decade, there has been talk of setting up private sector pension funds. What has happened? Scarcely anything. A major problem, of huge unfunded debt, has not been addressed. What has been done to remove barriers to employment? What has been done to lessen the 40 per cent. employment taxes that keep people out of employment, and price people out of jobs? Absolutely nothing. It is Europe's priority, in terms of its own good in the world, as well as in terms of creating the single market, to address those items. For too long the excuse has been given, "You can push those under the bed; the single currency will do everything." The single currency will worsen Europe's economic problems, not solve them.
Thirdly, I shall talk about the role of the euro as a world currency reserve. I see a very great danger, because, to a large extent, there is an element of resentment and jealousy in wishing to compete with America, which is

the leading world power and owner of the reserve currency, and in the desire to compete with and perhaps even overtake it. If one follows policies that are designed to achieve a strong, hard reserve currency, where one is running a substantial external surplus, one runs the risk of slipping into the very problems that face Japan. A country can have a substantial reserve currency only if it is in regular deficit, creating the external ownership of the currency, which others can buy, hold and trade among themselves. I severely warn Europe and the Government that, if that is the way in which the European central bank goes, there is a danger that Europe will face the same problems in a few years that have faced Japan this decade.
I conclude by making the essential point that the Committee should vote for the amendment, because at its heart is the single currency, and because it is a serious stage down the path of European political integration. That is something of which this country has little or no knowledge, which perhaps the House of Commons or others have deliberately concealed from it. It is time that the people of this country knew where we are going, what is involved and what the risks are and were free to express what I believe to be their view—that they do not wish to lose their nation statehood.

Dr. Julian Lewis: I wish to touch on three topics—two briefly and one in more detail. I shall say a few words about economic and monetary union, then a few words about the human rights provision of article F.1 and, finally, and in more detail, I shall speak about a common foreign and security policy.
On economic and monetary union, I have no difficulty with the intervention made by my hon. Friend the Member for Wycombe (Sir R. Whitney). I believe that, in principle, a single currency is wrong. It will not work and I cannot envisage any circumstances in which I would support our joining it. However, there is always the possibility that all one's predictions in economic and political forecasting may be proven by events to be wrong.
If, over a decade, everything that people believe—as I do—is wrong with the single currency were tried out by other countries in the European Union and, against all our expectations, all our fears were shown to be groundless, we would have to admit that we were wrong, but we do not expect that to happen. That is why it is possible for people who believe—as I do—that we should never join the single currency to live quite happily with the formula propounded by the Conservative Opposition: that we should oppose the single currency in this Parliament and the next.
Even someone as certain as I am that the single currency will prove to be a disaster for the countries that enter into it would have to admit that we were wrong if at the end of this Parliament and the next our fears were shown to be groundless. I am happy to give that hostage to fortune because I do not believe that we will be shown to be wrong. I believe that EMU will turn out to be an implosion on an even greater scale than was the implosion of the exchange rate mechanism in 1992.
It is rather strange that people—not necessarily hon. Members who are present for this debate—increasingly refer to European monetary union rather than to economic and monetary union, which is what EMU stands for. The distinction is important, because the term economic and monetary union recognises the fact that there cannot


be monetary union without economic union. We cannot have a single currency without creating a single economy. I have said before—and I shall never tire of saying—that we cannot have a single economy without creating a single Government, and we cannot have a single Government without creating a single state. It therefore follows that those who oppose the creation of a single state of Europe must oppose the introduction of a single currency for Europe, because the one leads directly to the other.
I was interested in the comments of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). He said that he is not in favour of a single state, but that he is in favour of ever closer union, by which I take him to mean ever closer political union. My logical faculties may not be up to the task, but it seems to me that that argument is like saying that it is better to travel hopefully than to arrive. I remember a philosophical paradox that goes something like this: if a person starts out a certain distance from a fixed point and always moves towards it by covering half the remaining distance between him and that fixed point, he will move forward without ever reaching the fixed point. That is what my right hon. and learned Friend seems to have in mind: it is fine for us to go on having ever closer political union, but heaven forfend that we should end up with a politically united Europe.
People who believe in ever closer political union should have the courage of their convictions and say that they want a politically united Europe. They cannot say that they want one without saying that they want the other, because the one will inevitably lead to the other.
Conservative Members have gone into the human rights provisions in great depth and I do not intend to repeat their arguments. I shall merely point out that, in response to a question from me during the debate on 12 November, the Foreign Secretary said that he was willing to give me
an undertaking that, so long as the Labour party is in power, it will not be possible to find 14 EU states that will agree that the Government are in serious and persistent violation of democracy or of human rights."—[0fficial Report, 12 November 1997; Vol. 300, c. 912.]
Much has been made of the example of the Greek colonels and much has been said about what we would do if an undemocratic regime came to power. My fear about the provision is not so much that it will be used directly against this country as that it could be used indirectly.
Suppose this country were in a minority of one, not over a human rights question but over some other matter such as our budget rebate or the beef crisis. Would it not be tempting for other EU states to invoke the clause on a completely separate issue, such as discrimination on grounds of gender or homosexual rights in the armed forces, not so as to overrule us on the matter of the human rights that allegedly we were persistently abusing, but to deprive us of our veto so as to overcome the fact that we were the sole member state blocking progress on the other issue? My concern is not about direct application, but is about the indirect leverage given by article F.1, which would enable others to deprive this country of its protection, its veto and its voting rights.
6.45 pm
The main purpose of my remarks is to deal with common foreign and security policy. It may come as a surprise to Labour Members—

Mr. David Faber: Both of them.

Dr. Lewis: As my hon. Friend observes, the Labour party is represented in this important Committee by fewer than the proverbial contents of a telephone box.
I have a confession to make. It may come as a surprise to such of those dedicated Europhiles as are present on the Labour Benches to know that I am a Johnny-come-lately Euro-sceptic.

Mr. Bercow: My hon. Friend took far too long.

Dr. Lewis: My hon. Friend is absolutely right. I can even name the day on which I became a Euro-sceptic: it was 22 March 1995. I read an article in The Times, which was headed:
Santer seeks right to shape foreign policy for Europe".
It said:
Brussels should have the right to shape Europe's foreign and security policy, a power currently jealously guarded by the governments of the European Union's 15 member states, Jacques Santer, the President of the European Commission, said yesterday.
The article said that he had addressed the institutional committee of the European Parliament and had called for
a strengthening of the European Commission as the guardian of the European treaties. He said the Commission should be given the right of initiative in foreign and security policy.
I have another confession to make. One does not often hear a politician say, "I was wrong," but I was wrong in my assessment of integration theory, which I learnt about when I studied international relations. Integration theory was developed more than a score years ago. As undergraduates, we were told by our lecturers that if states could not directly be persuaded openly to coalesce and to become a single nation state, they could indirectly be lured into doing so by a process of functional integration. The idea was that common patterns could be created through a particular sphere of activity so that states would be drawn together and, before they knew where they were, they would be irreversibly interlocked.
In my naivety, I thought that that would never work because states have a hard-headed understanding of their national interests. I thought that they would be drawn part of the way along that slope, but that they would see what was happening, would turn round and would retreat from it. I confess that I underestimated the power of functional integration. The process of creeping federalisation has undoubtedly been far more successful than one could possibly have anticipated.

Mr. Bercow: I am following closely the logic of my hon. Friend's thesis. Does he agree that the people of Britain will never knowingly consent to being governed by those who do not speak their language, live in their country or depend on their votes?

Dr. Lewis: I agree with my hon. Friend, but I am not saying that that will not happen because the operative word in his intervention was "knowingly". The methods


that have been adopted bear a frightening resemblance to the methods that were used by other philosophies in the past. During the cold war, I often had to look at Marxist doctrine and the speeches of Soviet leaders. The people who delivered those speeches tried to cram as many words as possible into the smallest amount of thought. They tried to deaden the perception of people who were attempting to establish the propositions that were being conveyed by obfuscating them with massive amounts of jargon. In the end, people gave up rather than continue to try to tease out the meaning in the small print.
Not only has the technique of trying to bore people into not knowing what they are being lured into been used; people have tried selectively to misquote history. I have in mind the attempts to cite Winston Churchill and his Zurich speech in 1946 as if he were recommending that Britain should be part of a united states of Europe. I shall read a few brief extracts from his speech of 19 September 1946. He said:
I am now going to say something that will astonish you. The first step in the re-creation of the European family must be a partnership between France and Germany. In this way only can France recover the moral leadership of Europe.
Later he said:
Our constant aim must be to build and fortify the strength of UNO.
The United Nations Organisation. He continued:
Under and within that world concept we must re-create the European family in a regional structure called, it may be, the United States of Europe…In all this urgent work, France and Germany must take the lead together. Great Britain, the British Commonwealth of Nations, mighty America, and I trust, Soviet Russia—for then indeed all would be well—must be the friends and sponsors of the new Europe and must champion its right to live and shine.
That was under the aegis of a world body because in 1945–46 the United Nations was seen primarily as a "world security organisation". The phrase was often used interchangeably with "United Nations Organisation". In that context, it was possible to envisage regional groupings and alliances for collective self-defence.
It was greatly to the credit of the post-war Labour Government that they signed the treaty of accession to NATO in April 1949. The treaty contained vital provisions, especially in articles 3 and 5. Article 3 stated:
In order more effectively to achieve the objectives of this treaty, The Parties, separately and jointly by means of continuous and effective self-help and mutual aid, will maintain and develop their individual and collective capacity to resist armed attack.
Article 5 stated:
The Parties agreed that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all".
When there is such a superbly strong, successful and impossible-to-improve NATO treaty, why is it necessary to create a common foreign and security policy? The answer is spelt out in article B of the Amsterdam treaty, which states:
The Union shall set itself the following objectives:
—to assert its identity on the international scene, in particular through the implementation of a common foreign and security policy including the progressive framing of a common defence policy".

That is not an intention to replace the NATO treaty or to improve the security of Europe's nation states. The aim is to assert the identity of this creature, the European Union, on the international scene. If there were ever a case of poor motivation for a dangerous act, that is it.

Sir Raymond Whitney: I am listening to my hon. Friend with great interest, not least because he and I have collaborated in the past on many ventures. On this issue our views are somewhat different. Is he not satisfied that the Amsterdam treaty clearly secures the role of the Western European Union and its relationship with the European Union rather better than was done by the Maastricht treaty, which I am sure my hon. Friend would also condemn? Surely that was, from his point of view, a step forward. The close relationship between the WEU and NATO is not challenged or threatened. My hon. Friend is concerned about the potential loss of sovereignty. He spoke about our NATO defence obligations. Does he agree that to some extent our membership of and commitment to NATO are a derogation of our sovereignty?

Dr. Lewis: My hon. Friend makes two points. I warmly remember our joint ventures against the unilateralist policies of the Labour party in the 1980s. I could not have had a more staunch colleague in those battles. He was from the front rank and he held ministerial office during that important period for NATO as a whole. He asked about the pooling of sovereignty. I have another conceptual problem about that which is analogous to the one about closer political union without ever having a united political society. One cannot pool sovereignty any more than one can pool virginity. One either has it or has lost it. In the context of NATO, one must ask whether the loss of sovereignty is parallel to the loss of virtue.

Mr. Bercow: Does my hon. Friend recall that, in the past, he likened the process of European integration to the process of seduction? He has observed to me and to others that the outcome in both cases seems to be the same.

Dr. Lewis: I recognise my words of wisdom from the past, but I do not wish to be distracted from my words of wisdom in the present. On whether one has pooled sovereignty or lost virtue, the issue of NATO is a case in point. Nothing in the NATO treaty is irreversible, but the European treaties are irreversible. If there were a parallel with the NATO treaty, rather than a treaty from which one cannot withdraw or whose provisions cannot be reversed if they work out badly, I would be far more relaxed about these matters.
I am getting signs that I am using up my allotted time very quickly. The WEU is a useful political prop to NATO, but it could turn into the Achilles heel of the alliance because, naturally, the WEU does not have the involvement of America. The more that is done to build up the parts and aspects of NATO that exclude America, the more is done to undermine the basic security of Europe, which depends upon American involvement.

Mr. Damian Green: I am worried that my hon. Friend's characteristic eloquence is masking an illogical position. He says that the European treaties that the United Kingdom has signed are irreversible and that it


is impossible to pool sovereignty, which is like virginity; but this country has already lost its virginity and sovereignty, so all his arguments are a waste of time. On his own terms, his argument that we cannot pool sovereignty and that it is like virginity must be wrong.

Dr. Lewis: With respect, that is not true; we are being asked to abrogate each aspect of sovereignty and we either keep that function or lose it irretrievably. Just as there is more than one person in a country, so there is more than one opportunity to lose one's virginity irrecoverably. There is no chance to recover subsequently each one of the functions that is lost.

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Mr. John Wilkinson: May I challenge one aspect of my hon. Friend's admirable speech? He says that the acquis communautaire is in essence an irretrievable process—an irrecoverable process. As a sovereign Parliament, could we not, if we had the support of the British people, abrogate the treaty on union, as we could any other treaty? We could make a unilateral declaration of independence at any time of our choosing.

Dr. Lewis: We could do that at present but, as I have explained, the idea of economic and monetary union is to have a situation in which we could no longer do that because we would be subject to the authority of a single Government. We would be in no position to abrogate any of the treaties that we had been drawn into over previous years.
I wish to place other Amsterdam treaty provisions on the record. It says:
The European Council shall decide on common strategies to be implemented by the Union in areas where the Member States have important interests in common.
Common strategies shall set out their objectives, duration and the means to be made available by the Union and the Member States…
The Council shall ensure the unity, consistency and effectiveness of action by the Union…
Joint actions shall commit the Member States in the positions they adopt and in the conduct of their activity…
The Council shall adopt common positions. Common positions shall define the approach of the Union to a particular matter of a geographical or thematic nature. Member States shall ensure that their national policies conform to the common positions.
The treaty fulfils the aim that Jacques Santer set out in that speech in March 1995. He intended that the intergovernmental conference should do for foreign and security policy what Maastricht attempted to do for economic policy. I fear that the treaty will do that. I wholly oppose it and support the amendment.

Mr. Ian Taylor: I take great pleasure in following two such cerebral contributions by my honourable colleagues. I am not sure that I can emulate them. My right hon. Friend the Member for Huntingdon (Mr. Major) might have said that they were perhaps a touch too ideological in tone. My hon. Friend the Member for New Forest, East (Dr. Lewis) touchingly spoke about his Pauline conversion and quoted the headline about Santer dictating foreign policy, which sounds like a proper offering for the Christmas season. Nevertheless, perhaps it did not

have the same beneficial consequences as the original Pauline conversion, which I think was for the better: my hon. Friend's conversion was, sadly, for the worse.
I listened carefully to my hon. Friend the Member for Arundel and South Downs (Mr. Flight), who from his previous occupation is genuinely well informed on matters of currency and international currency movements. We need to put one or two factors about monetary union firmly on the record. Whether or not the Conservative party is in favour of a single currency, a single currency there will be. There will also be considerable consequences for world foreign reserves, not least because there will be considerable debt instruments. Under the convergence criteria and the terms of monetary union, it is likely that all Governments' deficits will be converted into euros and that those will be securitised.
The second factor that one needs to bear in mind about monetary union is that it will have a massive effect on world trade and the currencies held in world trade, largely because of the propensity to import by the European Union, which is greater than that of the United States of America. The consequence is that contracts are likely to be written in euros.
Let us be under no misapprehension: whether we like it or not, the euro will come and it will have a dramatic impact on world trade and on reserve currencies. In many different ways, it will also have a considerable knock-on impact on British companies, including—despite what the Institute of Directors erroneously says—medium and small companies, simply because they are part of the supply chains that will, inevitably, increasingly use the euro as part of their internal accounting, treasury and supply contracts. All the new systems will, to a greater or lesser extent—but at least to some extent—have a knock-on effect on hundreds of thousands of smaller British companies.
That will all begin from 1 January 1999. Many small UK companies will find that their price lists will have to be denominated in euros. Their computer databases will not be able to cope, because the convergence criteria are different from those established in international currency markets. The databases will in any case have to be updated. Those companies will have to learn all sorts of new and exciting things, such as triangulation, dealing in currencies that are not part of the euro, and dealing with the euro.
I am not trying to be too technical. I am pointing out merely that the euro will emerge and have a knock-on effect on British business, yet the Chancellor of the Exchequer still believes that he can sit around and wait and see what happens. Not surprisingly he has found—much to the UK's cost—that sitting around and not making a firm commitment to make sterling a part of economic and monetary union has excluded him from the conference table. That is a sad event. Once it is realised that the UK and sterling will be less influential in world markets—because of our exclusion from the controlling bloc that will influence the future of economic and monetary union and the euro—the British public will wake up to the fact that this is genuinely a loss of sovereignty. That is the opposite of the arguments that have been advanced over the past few weeks in the Chamber and outside.
It is not timely for us to enter a cerebral, intellectual and academic discussion of what the word "sovereignty" means. My hon. Friend the Member for New Forest,


East showed the dangers of that when he started almost to decline the noun "virgin", as if it had different meanings. It has one meaning. One loses one's virginity—I would not understand that, of course—or one does not. The UK has lost its virginity many times and it has not been that painful, except, funnily enough, in relation to currency.
Currency is the one sector where we have not had sovereignty for a long time. It has been mismanaged and, sadly for exporters, over the past few months, it has been the opposite—it has been too strong. In those circumstances, if we are not going to be able to influence the principal currency used in 80 per cent. of our single market—namely, the European Union—we shall lose sovereignty. It is not only by joining that we lose sovereignty, but by not joining. We lose sovereignty by not having influence and not being able to ensure that the rules of the game are not only properly formed but observed. That seems to be the public's main concern as to whether the government of this country, now in the hands of the Labour party, is being properly conducted in the long-term interests of our people, not some semantic debate about whether joining might or might not mean the loss of some academic form of sovereignty. Conservatives are supposedly famous for practical politics, so we should be concerned about whether we can influence the economic well-being of our people if we are not part of something as dramatically important as economic and monetary union.
I wish to refer to another matter that has been touched on by other hon. Members. There is no doubt that the development of what is now called the European Union has been political. My political activity began in the 1960s. I became a member of the Conservative party because the party was positive about Europe. Europe was a political experiment. I never engage in debates about what it might become, and whether it might become more like the United States. Europe is a unique experiment, and there is nothing to compare it with. We are making it up as we go along. That sometimes leads to failure, and sometimes to success, but let us not fall into the trap of making comparisons. It was the attempt to experiment that attracted me to the Conservative party in the 1960s.
The European Union is a political exercise. After all, it stemmed from the most political exercise of all—the European Coal and Steel Community and the desire to pool the key industries of what had been the driving powers in the first and second world wars. Out of the Coal and Steel Community came the Common Market. At no stage has there been any attempt to disguise the political element.
In an intervention on my hon. Friend the Member for North Norfolk (Mr. Prior), I said that when Margaret Thatcher was Prime Minister, she made the greatest political gesture of all. She had deliberately given away—let us use those words provocatively—sovereignty, knowing that without qualified majority voting in the single market, there would be no single market. There would be no way to overcome the protectionist instincts of certain countries unless it was possible to override them in the voting structure. She understood that when she gave up national sovereignty—I would not insult her by saying that she did not understand, so I assume she did.
Perversely, it is not being said that the Amsterdam treaty is political. In fact, it is the least significant of the several treaties that the House has debated over the years. In some ways, it is beneficial because it tidies up some of the things that we did not get right at Maastricht.

Mr. Bercow: Does my hon. Friend believe that there is a ratchet for European integration which, to all intents and purposes, is irresistible?

Mr. Taylor: No, I do not believe in the ratchet theory any more than I necessarily believe in the train theory, for the reason that I started to outline a moment ago. There is no preordained destination. The whole point is that mistakes will be made in the European Union. None of us who regard ourselves as Europhiles, because we are supposed to have labels these days, would say that the European Union is always right and that no mistakes have been made. I will oppose things that are wrong in the European Union, but if I oppose them, or if the Prime Minister of the day opposes them, it is important that in doing so we have influence over the other members of the Union if we are to get our way. We shall not get our way if we sound abusive from the sidelines.
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It is important to make a clear commitment to being part of the most exciting political and economic experiment of our generation, one which we have to ensure succeeds. There is no benefit for this nation in any political party investing all its political capital in the failure of the euro. The failure of the euro would be a disaster for the economic interests of this country and its business men and women. Of course, no political party would dream of investing all its political capital in the failure of the euro—

Mr. Denis MacShane: Except one.

Mr. Taylor: I do not know which one that might be, but I certainly hope that it is not the one to which I am proud to belong. It is important to understand that influence is part of the power structure that some call sovereignty, and our influence over the rest of the European Union is critically based on our credible attachment to it. In that respect, there are no half measures. If there are successful ways to bring about an ever closer union or unity, we shall pursue them because they are successful. The single market is one of them.
I am often puzzled by those who are worried about this form of ever closer union in view of the way in which the markets are driving that union. Within the single market of which we were, in a sense, the founding fathers, we are breaking down barriers and forcing the market to dictate terms to national Governments. It is not possible to have an independent fiscal policy if independence means that we pay no attention to what else is happening in the same market in which we are freely trading in goods, services and capital and in which people can move.
There are implications. No Chancellor in living memory has set an exchange rate without paying close attention to what is happening in the capital markets, and in particular the market in which there is free movement of capital—again, incidentally, something of which we


were the leading proponent. It was as a result of our arguments that the French eventually opened up what had been a much more protectionist market.

Sir Peter Tapsell: My hon. Friend is saying that markets are driving these matters but, if that is so, does he not think that they are driving them in a curious way? Today, there are FF10 and almost DM3 to the pound. No one who has considered the practicalities has ever suggested that we would join the single currency at a rate higher than DM2.6 to the pound. How would we relate to the practical currency in practical terms? One of the reasons why sterling is so strong against the deutschmark and the French franc is precisely that the international markets think that we are not going to join the euro, because it will be a disaster. If it is a disaster, it is better to be out than in.

Mr. Taylor: First, I repeat that the failure of the euro would not leave us immune and would be extremely damaging to our economy. Secondly, I do not draw the same conclusion as my hon. Friend. The position of sterling at the moment is due to a variety of factors, not least those being witnessed in Japan. They are a sign of the considerable turbulence and disruption that can occur on international markets. They also point to another factor that I have not yet mentioned, which is, once the euro is out there, sterling is likely to be buffeted up and down because of the squeezing effect of the euro as a reserve currency, the dollar and whatever happens to the yen. None of those factors is very comforting to any British Chancellor or British business man.
My hon. Friend the Member for Louth and Horncastle (Sir P. Tapsell) should not conclude that the markets have assumed that sterling will not join. I am not going to make a speech about economic policy, but I suspect that the Chancellor is holding back some information about the slowing down of the British economy towards the end of the cycle. We need more information from him about how he expects convergence to take place and then be sustained, and how he intends to run the economy to achieve the convergence that he says would be ideal. Those factors will have a big impact on sterling.
My hon. Friend the Member for Louth and Horncastle is absolutely right that one of the factors causing us to pause and preventing us from immediately entering economic and monetary union is the way in which sterling has bounced all over the place. There will have to be some currency stability and other types of stability as we join.
The market signals given by the Chancellor could be very encouraging. I dare say that, if he stood up and said, "We now have a clear timetable for joining monetary union," British exporters would be extremely happy, because sterling would begin to converge; and it would be a downwards movement.
The treaty's overall effect is to tidy and tighten up one or two aspects of previous treaties. I agree with my right hon. and learned Friend the shadow Foreign Secretary, who, in his opening speech for this debate, clearly said that there would have to be an institutional structure and a strong European Court of Justice. Such beliefs do not prevent us from saying that there should be criticism of or changes to the European Court of Justice. We can argue

that case forcefully. Sadly, I do not believe that, at the Amsterdam summit, the Foreign Secretary argued the case as strongly as he should have done.
The point is that the European Court of Justice and the many other institutional parts of the European Union are vital to its success; and that is why I support them.
Amendment No. 65 merely confirms that article 1 is not part of the Bill. On that basis, and that basis alone, I shall be very happy to follow the shadow Foreign Secretary and Opposition Front Benchers into the Lobby.

The Minister of State, Foreign and Commonwealth Office (Mr. Doug Henderson): When I am required to reply to debates, I try to keep myself in order by putting page numbers on my notes. Today, I have used not only page numbers but dates. We have had a very wide-ranging debate. Not all the speeches have been directed completely to the central point of the amendments, but—because of the nature of the subject and the way in which we have to debate the issues—that has largely been inevitable.
To help the Committee, I should like first to explain in reasonably technical terms my specific views on the amendments and new clauses. Subsequently, I should like to deal with some of the issues raised in the debate. It would be impossible to deal with all the issues, although I shall try to do my best.
The Government reject amendment No. 65 because it would delete sections of article 1 that are necessary to write into British law sections of the treaty and of the first pillar, such as the flexibility provisions.
The Government also reject amendments Nos. 13 to 15 and 17 to 21, which would also prevent us from adopting the necessary sections of article 1, but for different reasons. Although they accept article 1, they would make certain exclusions. Therefore, the effect would be the same.
The Government also reject amendment No. 1, which was tabled by some of my hon. Friends. The amendment would delete the section on economic and monetary union, which was originally included in the Maastricht treaty and repeated in the Amsterdam treaty. The Government wish that provision to remain.
We reject new clause 30. I believe that it would be inappropriate to delay the Bill's enactment so that the Attorney-General could report on any extension of the powers held by the European Court of Justice.
The Government also reject new clause 37, which would require a resolution of the House before any relations could be fostered between the European Union and the Western European Union. Anyone who has been involved in any of those matters will know that that is clearly impractical.
The Government also reject new clause 38, which would require a vote of Parliament before any decisions were taken on a common foreign and security policy. The right hon. and learned Member for Rushcliffe (Mr. Clarke)—who mentioned his involvement over the years in the Union's various forums—will know, as will the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), that dealing with such matters in the Chamber would be impractical.
The Government are committed to improving scrutiny of European matters, as we have already announced in Select Committees. The Leader of the House will soon be


making a general announcement on the matter. If I have managed to assess correctly the response of Select Committees, they were reasonably warm to our plans to improve scrutiny.
In trying to deal with the issues raised by hon. Members, it may be useful if I start with the speeches that were made today, because they are most readily in the minds of hon. Members.
I used to think of the hon. Member for Esher and Walton (Mr. Taylor)—who tried to talk out my Access to Health Records Act 1990—as an errand boy from the Government. I have changed my view, as he is clearly a man of independent thought. The House welcomes his independence. Whatever one may think of his speech, he raised some very important issues, which have also been raised by members of the business and commercial community with whom I have met. I commend him for raising the issues in the debate.
I did not agree with all the points that the hon. Member for Esher and Walton made or with his comments on the Chancellor of the Exchequer, whose recent statement in the House has been well received by our European partners. Nevertheless, the hon. Gentleman pointed out that when a euro is established, it will have a dramatic impact as a reserve currency. Surely that must be true. He also said that companies will begin to price in euros because it will suit their businesses to do so.
Companies such as Marks and Spencer have already said that they plan to offer customers and suppliers the possibility of making transactions in euros. People from many small companies have told me that, because they are involved in the European economic chain, they would like to be able to quote in euros. They have formed their assessment on that basis.
The hon. Member for Esher and Walton was right when he said that the euro's failure would be disastrous not only for those involved but for all of Europe and for the entire European monetary system. Arguably, the consequences could extend even beyond Europe.
We heard an interesting speech by the hon. Member for New Forest, East (Dr. Lewis). He began by confessing his sins, reminding me that a militant tendency is not peculiar to one party, and that confessions by those belonging to such tendencies are not peculiar to one party. Nevertheless, I tell him that it is better to be honest with oneself and to be honest about the issues. The Committee will respect him for his honesty.
I do not know what the Committee will make of the comment by the hon. Member for New Forest, East that the United Kingdom should never join a European currency. He may have some difficulty, because, in the past six months, the Leader of the Opposition has held five positions on a European currency. Originally, he said, "Never"; then it was "Maybe"; then it was "In 10 years"; then it was "Maybe"; and now he is back to "In 10 years". At least the hon. Gentleman is consistent. He says "Never", and the House looks forward to his sticking to that position.
The hon. Member for North Norfolk (Mr. Prior) made the important point that Europe is not only about trade; it has a political dimension. I did not agree with his other remarks, but I concur with him on that point.
The hon. Member for New Forest, West (Mr. Swayne) said that he was concerned about the word xenophobic. He was worried, after listening to some Conservative

Members' speeches, that they might risk being indicted. He has identified that risk, but Conservative Members know what to do if they want to keep themselves straight.
The hon. Member for Arundel and South Downs (Mr. Flight) said that if we had to sign up to the treaty, it would be the end of the nation state. He also thought that it was deceitful of other hon. Members not to own up to that in their comments on the treaty, and that they were particularly deceitful when they said that the treaty did not matter. I respect the fact that the hon. Gentleman holds a different view from mine, but I believe that he also holds a very different view from that held by many of his hon. Friends who have spoken in the debate.
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My hon. Friend the Member for Ilford, South (Mr. Gapes) said that this was a modest treaty and that he expected it to take us forward from Maastricht to an era of enlargement and reform of the common agricultural policy. He believed that if we accepted the amendments, we would hold up that process. He rejected the amendments for that important reason; I reject them for that reason and others.
My hon. Friend the Member for Harlow (Mr. Rammell) supported my hon. Friend the Member for Ilford, South; he opposed the amendments for similar reasons. He also said that he thought that the contributions from Conservative Members were unrepresentative of the views of the Committee and of the Opposition generally. That imbalance has been partially corrected today, because we have seen that there are very different views within the Conservative party on Europe.
Many Conservatives feel that the leadership of their party has got things wrong and risks alienating the British public for a long time. It is important for British democracy that that view has been put today and that the British people know that the Conservative leadership does not have the support of a significant section of the Conservative party on the issue.
My hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) said that she would not support the amendments because she wanted to move on to the real debate on structural funds which would follow the Luxembourg summit. She said that that was of great importance for her constituency and I can understand why she took that view.
I did not expect the same support from my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) and my right hon. Friend the Member for Llanelli (Mr. Davies) as I had from other hon. Friends. However, I was pleased that they highlighted the importance of seeking high employment. There may be some differences on how we can best reduce unemployment and get higher employment, but my hon. Friend and my right hon. Friend agreed that it was important that the treaty emphasised tackling unemployment, and they are right.
My hon. Friend and my right hon. Friend also asked, in different ways, whether it was possible to define a high level of employment. I do not think that it is possible to define that because there are as many different views on that as there are Members of Parliament. What matters is that we all recognise the importance of tackling the terrible problem of unemployment. That is a very important issue in the European context and in the context of our nation state.
My hon. Friend and my right hon. Friend said that by raising the issue of employment, we also raised the important issue of employability. I know that we shall discuss the matter later in Committee so I do not want to dwell on it now. However, it is crucial that as a wider European community, we consider how we best prepare ourselves to take on the jobs challenge of tomorrow. There is agreement on that in the factories and businesses of my constituency because the people who work there know that they must be employable tomorrow. If they are employable, businesses will flourish and will be able to provide them with employment.

Mr. Gerald Howarth: Can the Minister explain to the Committee why the United Kingdom is enjoying increasingly lower unemployment while unemployment is rising on the continent? Is it, perhaps, something to do with the social chapter and all the burdens on business on the continent which we in these islands have resisted?

Mr. Henderson: I am tempted to say to the hon. Gentleman that seven months of a Labour Government have not done us any harm in that regard. The hon. Gentleman raises a serious question, however. One cannot measure employment over a short period; one must look at it over the long term. Over the long term, we have no better record than comparable countries in the European Union. It is arguable that for much of the period of Conservative Government, we had a far poorer record than many of our European partners. The main factor is that the business cycle is at a different point and that is the real reason why there is a difference between us and our European partners.

Mr. Ted Rowlands: If we can have inflation targets, monetary targets and deficit targets, why can we not have employment targets?

Mr. Henderson: My hon. Friend will recognise that it is easier for the Government to be specific about inflation targets and to take measures that are tightly linked to achieving those targets than to set employment targets. Even if the Government had to set employment targets, it would not be easy to hit them, as my hon. Friend will understand. That is why it is important to get the approach right. My right hon. Friend the Chancellor made it clear in his statement to the House three weeks ago that the important thing is to fight inflation and to get the right monetary context, and then to take all the other measures to raise employability which will help to tackle the problem of unemployment.

Sir Peter Tapsell: The hon. Gentleman has just said what people are perpetually saying, which is that the economic cycle in Britain is different from that on the continent of Europe. The whole point of economics is to try to influence economic cycles. The reason why our economic cycle is in a beneficial phase is that we left the exchange rate mechanism in 1992. The reason why European countries are in a bad economic cycle is that they stayed within it.

Mr. Henderson: I know that the hon. Gentleman follows these matters closely. He would be dishonest with

himself if he did not recognise that the reason why our unemployment levels are now lower than those in Europe is the stage of the economic cycle. One can then have an argument about the extent to which the economic cycle has been influenced beneficially or in a damaging way. The point my right hon. Friend the Chancellor made in his statement to the House three weeks ago was that we must influence European matters positively. The reason why there has been a marginal improvement in employment in recent years is that we were recovering from the devastation caused by the Conservatives' mismanagement of the economy from 1987 to 1992.

Mr. Flight: Unemployment can be caused by cyclical or structural factors. Surely it is clear that the major cause of unemployment in Europe is structural. The European economies have been in an up-cycle for the past 18 months and will probably reach the peak of that cycle during the next six months. There is still massive and rising structural unemployment which results from the social chapter and the huge cost of employing people.

Mr. Henderson: The hon. Gentleman is in a fantasy world. Of course employment is influenced by cyclical and structural factors, but the hon. Gentleman is surely not telling me that the reason why all the shipyards went bust in the north of England was cyclical issues or burdens on business. It happened because of fundamental structural imbalances in the economy. We have to improve employability to take on the challenges in Europe and the rest of the world. It is important to make progress in the Amsterdam treaty so that we can take up the other issues at Luxembourg and beyond.

Mr. Ian Taylor: rose—

Mr. Denzil Davies: rose—

Mr. Henderson: My patience will be exhausted in a little while.

Mr. Taylor: I intervene to help the Minister. The flexible labour policies that the Chancellor has been preaching recently—he has begun to understand why we put those policies into practice when we were in government—are crucial to the success of economic and monetary union. Those of us who can envisage economic and monetary union taking place understand that flexible labour markets are at the heart of it. There is no confusion. The Minister can admit that flexible markets will assist the reduction in unemployment and the increase in the number of jobs created on the continent. That will be good news for the whole European Union.

Mr. Henderson: The hon. Gentleman makes an interesting point. I do not totally disagree with him. However, I do not think that there is any conflict between giving working people protection—in some instances at a European level, but in more instances at a nation state level—and having a flexible labour market that allows companies to change their production methods and reskill workers so that they can take on the challenges of tomorrow. I see the hon. Gentleman smile slightly. He knows that business people tell him the same as they have told me.

Mr. Denzil Davies: I apologise for interrupting my hon. Friend. As a non-economist, I have always been


interested in the economic cycle. The Old Testament talks about seven lean years and seven fat years. I think that someone called Krondatieff talked about 50 years. How long will the economic cycle last?

Mr. Henderson: I am grateful to my right hon. Friend for raising that. If I knew the answer, I would be rich—although I am probably debarred as a Minister from allowing my bank to invest on my behalf. A cycle lasts as long as it lasts. We cannot predict how long the current cycle will last. We can only prepare for decisions that we may want to take in future on European currencies. It is crucial that we debate such matters and that businesses are aware of the debate, take part in it and prepare themselves for the decision.
I want to move on, because we have had a reasonable exchange of views on economic issues. The hon. Member for Buckingham (Mr. Bercow) seems to be in the Chamber only when he is speaking—which is quite frequently. He said that the provisions on basic rights were about meddling on issues such as the minimum wage, the age of consent and strikes in essential services.
As the right hon. and learned Member for Rushcliffe made clear, the hon. Gentleman has misread the purpose of those clauses, which is to prepare the European Union for enlargement. The provisions would be invoked only if there was a massive change in one of the new countries, or in one of the existing countries, that posed a real threat to democracy, such as the establishment of an entrenched fascist Government. That was the intention of those who were involved initially. I am sure the Conservatives who were involved in the discussions took part in that dialogue. I was involved for six weeks before Amsterdam and my right hon. Friends the Prime Minister and the Foreign Secretary continued that dialogue. The intention is clear. Being alarmist about the issue does no good.

Mr. Michael Howard: Does the hon. Gentleman recall my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) saying that there was no guarantee that the provisions would be interpreted in that way? Their interpretation is to be entirely at the behest of the other member states. Would it not be better if a power were taken in the treaty to expel any member state that was in serious and fundamental breach of human rights rather than attempting to hold that state to its obligations while depriving it of rights?

Mr. Henderson: The right hon. and learned Gentleman is not aware of the debate that has taken place with our partners. We are talking about how to deal with a critical situation, not an everyday situation. It is a political decision which would have to be taken by a 15 minus one majority. Every country other than the country involved would have to agree. The power would not be used in a trifling way, to take revenge on an existing member because one country or a group of countries disagreed with it. If that happened, the future of the European Union would be in great jeopardy. [HON. MEMBERS: "It is."] No, it is not. The member states of the European Union have a deep commitment to making changes when necessary, agreeing common positions when it is sensible and retaining our distinctiveness when that is better.
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I am sorry to be taking so long, but I want to reply thoroughly to the debate. We should have a full interchange of views so that hon. Members know all the arguments when we come to vote. I shall have to take some time to reply because there have been so many contributions.
The right hon. and learned Member for Rushcliffe said that there were two differences between his position and mine on the treaty. He disagrees with the social chapter. We have already had an exchange on those arguments. I do not believe that the social chapter threatens the economic integrity of the European Union or that the business community here or elsewhere believes that. The social partners recognise that it is an essential part of the development of the Union, and one with which they can cope. It is not the case that every idea put up for inclusion in the social chapter will be included. There is a firm understanding of that among the majority of the partners I have talked to. I understand the right hon. and learned Gentleman's concerns, but he will find, as business will find, that it will not damage his other objectives.
The right hon. and learned Gentleman also talked about enlargement. He wanted further progress on that in the treaty. So did I. My right hon. Friends the Prime Minister and the Foreign Secretary pushed hard on the final evening of negotiations for progress on institutional reform. Our inability to reach an agreement was not due to a lack of motivation or an unwillingness on our part to consider other views. The problem was the intransigence of other partners. We shall continue to press for progress. I agree that reform of the institutional arrangements is essential before enlargement. The treaty says that that will be the case. I hope that when he has more time to reflect, the right hon. and learned Gentleman will follow his original instinct to be a little bit in favour of a modest treaty. I hope that he will give that further consideration before Third Reading.
I want to link the comments of the right hon. and learned Member for Rushcliffe with the opening comments of the right hon. and learned Member for Folkestone and Hythe about article F.1 on basic rights. The right hon. and learned Member for Rushcliffe said that he had no worries about establishing the basic right that if a country joins the European Union, it must meet certain conditions, which must be broadly reflective of what is only wise and consistent with a democracy. That is different from the position adopted by the right hon. and learned Member for Folkestone and Hythe.
On the first day of the debate, the right hon. and learned Member for Folkestone and Hythe said that he had some concerns about the flexibility of articles K.12 and K.15 and that he had sympathy for the objective. I understand that; I have read his speeches. We both agree that there is a need for flexibility, but that when that flexibility is applied, it should be applied by unanimity. I think that there is a misunderstanding on the matter.
In effect, there is an unanimity provision in the treaty: it is called the emergency brake. If nine or 10 countries decide that they want to act together to do something that the rest of the Union does not want to do, they should have flexibility to do so. However, if one or more than one country outside those nine or 10 countries says that it is in their national interest that such a thing does not


happen for a particular reason, they can invoke the emergency brake, and the decision would then need to be made by unanimity in the Council. What the right hon. and learned Gentleman is looking for is in the treaty. I hope that he will recognise that. That might make it slightly easier for him to vote with the Government.

Mr. Howard: I do not want to raise false expectations on the Minister's behalf. If that is indeed the explanation—it may be the explanation on a proper reading of the relevant portions of the treaty—why on earth does the treaty not make it clear that the article is based on unanimity? Why on earth does it use such circuitous language? Why does it use the language of qualified majority voting instead of saying straight out that such matters will be decided on the basis of unanimity?

Mr. Henderson: I am very glad that I gave way to the right hon. and learned Gentleman. I like to give those who wish to confess an opportunity to do so. That is not the first confession of a change of position in Committee. I genuinely welcome the fact that there has been a debate in Committee and that the Opposition have recognised that the Government have achieved what the Opposition said that they would have wanted to achieve had they taken part in the negotiations.

Mr. Cash: rose—

Mr. Henderson: I shall not incessantly give way to the hon. Gentleman, but I am tempted on this occasion.

Mr. Cash: Does the Minister accept that this new-fangled concept of flexibility has serious dangers not least because, as he suggested, it creates a legal framework in which there is a momentum towards the creation of functions for certain member states? There is a continuous momentum towards the kind of integration that, apparently, the Government on the whole do not want. Is not there a contradiction in their position in allowing, through the adoption of flexibility, a momentum towards integration, which they say they would rather not have?

Mr. Henderson: The hon. Gentleman is not aware that there was a discussion at the intergovernmental conference about whether flexibility is necessary in principle. The answer to that question was, by and large, yes, there may be circumstances in which different groups of countries want to do things at a different speed. The point was made that we could not have continual flexibility or it would destroy the single market, and everybody would want to do what they thought was in their interest and not combine over a common cause when it was not in their interest. There had to be some way of meeting the two objectives.
One of the ways, of which the hon. Member for Stone (Mr. Cash) may be aware, was to exclude all sorts of circumstances in which flexibility would not be possible. On reflection, and in the debate at the IGC—it was essentially agreed before the Prime Minister and the Foreign Secretary endorsed it on the final day—it was agreed that there should be a facility for an emergency

brake. None of the EU partners thought that it would be applied on a regular basis. It was included because it was thought that it might be necessary in some circumstances and the possibility should not be excluded.

Mr. Bernard Jenkin: On that point—

Mr. Henderson: I think that I have exhausted that point. The Opposition have put a fair argument and the Government have given a fair response.
The right hon. and learned Member for Folkestone and Hythe mentioned policing and said that article K.2 empowers Europol to join national policing operations in a support capacity. Yes, it does, but it does only that. There are very strict limits on how that should take place.
British police forces are, and will remain, responsible for British policing in Britain. That is not in any doubt. Any Europol personnel would be involved on the invitation of the British police and have no powers of arrest. The operational rules for Europol, which would have to be agreed in future, would be agreed only by unanimity. That is in the treaty. Therefore, if there were any suggestion that any operational rule would put Europol officers in a position—in Britain or anywhere else in the EU—that we felt was not proper or right, we would be able to block it because unanimous agreement would be required. I hope that I have been able to reassure the right hon. and learned Gentleman on that point.
I apologise to hon. Members who have just joined the Committee. There has been a very long two-day debate and there are many issues to cover.
The next issue is foreign policy. The hon. Member for Reigate (Mr. Blunt) made a useful contribution-although not in support of the Government. Although he was trying his best to support his Front-Bench team, he said that it was firmly established in the treaty that NATO was the basis of British defence for the future. We strove hard to achieve that in negotiations in Amsterdam and I am pleased that he recognised it.
The hon. Member also said that he supported the enlargement process. Again, I welcome his commitment. I hope that, when he weighs up the commitment that we achieved on NATO and our commitment to move forward from Maastricht in the EU to a post-Maastricht enlargement agenda, he will see the need to endorse the Amsterdam treaty as a way of moving from one position to the other. If we fail to endorse the Amsterdam treaty, there will be such disruption in the EU Councils that we will not be able to take on board enlargement in a way necessary to make progress. I know that that would concern the hon. Gentleman.

Mr. Crispin Blunt: The point that I made was that the NATO aspect sits alongside the progressive framing of a European defence identity. I should like the Minister to address that issue.

Mr. Henderson: The point is clear. When it comes to defence, it is the responsibility of NATO. There is a need to co-ordinate—for the Western European Union to talk to the European Council about important issues such as foreign policy issues that were agreed under Maastricht's second pillar by the previous Government. There is a need to liaise and work together, but ultimately, if it comes to


the defence of this nation, NATO will be the bedrock. That is firmly established in the treaty, but was a little ambiguous in the Maastricht treaty. We recognise that as one of the most important parts of the deal that we struck, although it is also part of a deal that other countries think is important.

Mr. Blunt: rose—

Mr. Henderson: If the hon. Gentleman will allow me, I shall move on to the points raised by the right hon. and learned Member for Folkestone and Hythe about foreign policy.
The right hon. and learned Gentleman asked whether there was a vision. The answer is yes, there is a vision. The vision is that we should be more co-operative with our European partners. After agreeing that foreign policy was a right area for the EU to be involved in under Maastricht, it is important that there is maximum co-operation, so that all the different organs know in which direction they are moving on any issue. Ultimately, there is a bedrock position on NATO.
How will the system work? It will require unanimity. The right hon. and learned Member for Folkestone and Hythe and others raised a question. Under the treaty, a strategy is differentiated from an action. A strategy must be agreed by unanimity, but an action in meeting a strategy can be agreed by qualified majority. The question was: if there was any possibility of force being involved, could it be agreed as an action to meet a strategy under QMV?
I know that the right hon. and learned Gentleman had serious worries about that issue, but I reassure him that such matters cannot be agreed by qualified majority voting. Anything that involves force—any defence issue—would have to be agreed by unanimity. If that decision were to be part of a strategy that involved a foreign policy initiative and defence considerations, the strategy would have to be agreed by unanimity. If force were not involved and a difference of view arose between one European nation and the other partners, an emergency brake could be applied, in a similar way to the one in the flexibility clause, which would put a stop to the proceedings and require unanimity. I believe that the right hon. and learned Gentleman's worries on that point have been met.
8 pm
I shall move on to the question of justice, on which several issues were raised. The first was raised by the right hon. and learned Member for Folkestone and Hythe and several of his colleagues. They asked why the European Court of Justice was not reformed by the Amsterdam treaty. The right hon. and learned Gentleman implied that a Conservative Government, had they been in power at the time of the Amsterdam talks, would have achieved reform, but I do not believe that that is the case.
The right hon. and learned Member for Rushcliffe said that support for reform existed in ECOFIN. He may be right, although I have my doubts. However, even if he were right, I assure the Committee that there was no question of our European partners agreeing to the proposals made by the previous Government to limit the retrospective effects of the court's jurisdiction. If the

right hon. and learned Member for Folkestone and Hythe had been a member of the Government in June, he would not have been able to achieve reform, even if he had told his hon. Friends that it was his main aim.
Several of my hon. Friends and other hon. Members raised the question of extensions to the powers of the European Court of Justice. A strong case for the ECJ has been made in the debate, because if any doubt arises about what is intended by any agreement for Community action, we need a body that intervenes to decide. I am glad that the laudable principle behind the ECJ has been recognised on both sides of the Committee. The question then arises about the extent of the authority of the European Court of Justice, but I can reassure hon. Members that the extensions are third pillar extensions.
I wish to give specific answers to the points raised in the debate about the extensions. The first extension is that the ECJ can be asked to give a preliminary ruling on the validity and interpretation of framework decisions and other Council decisions. The right hon. and learned Member for Folkestone and Hythe will know from his time at the Home Office that such issues arose in the discussions that he had with me. I know that he has a deep interest in them. He will know that, under the Maastricht treaty, it was possible to provide in conventions in the third pillar that the ECJ could intervene to settle any arguments about the workings of the convention. Indeed, the previous Government, on at least two occasions of which I am aware, signed conventions containing specific provisions allowing the ECJ to intervene. They signed the conventions on the application of customs information systems and on the protection of the financial interests of the Community. They were right to sign those conventions, because it was important that the ECJ should be able to intervene if any argument arose.
This Government, like the previous Government, do not want to see massive extensions in the powers of the ECJ in the third pillar. That is why, in the Amsterdam treaty, we agreed provisions that made a modest increase in those powers, which now apply to any framework decision under the Amsterdam treaty. If a member nation—for example, the United Kingdom—felt that it did not want the ECJ to intervene in an argument, it could block the framework decision because that would be decided by unanimity. Therefore, we would have to be sure when we signed a framework decision that we were prepared, if necessary, to have any argument adjudicated by the ECJ.
The second area of extension of the ECJ's powers is its ability to review an action brought by the Commission or a member state on whether the Council had acted beyond its powers. The right hon. and learned Member for Folkestone and Hythe will be aware that it is extremely unlikely that that power would be invoked, because a member state would not be likely to give the Council the authority in the first place and then challenge it through the ECJ at a later stage. It might happen on an interpretation of the wording, but not on a point of principle. There is, therefore, no great extension of power in that area.
The third area of extension of the ECJ's power is its ability to rule on any dispute between member states. The previous Government accepted a limited form of that power under the Maastricht treaty, and it has now been widened.
The fourth area of extension is the ability to rule on whether a Council decision in the areas that I have previously outlined—preliminary rulings, actions brought by the Commission and disputes between member states—is lawful. The ECJ may intervene on such points, but it is unlikely that that power will be used very often.
The fifth area of modest extension is when a group of member states pursue a flexible arrangement in the third pillar. The role of the ECJ would not be to mediate on the substance of any agreement, but it could mediate on whether the procedure had been followed in reaching the appropriate decision on flexibility.
I put it to the Committee that the Amsterdam treaty will mean only a limited extension of the powers of the ECJ. That extension is essential, and the Government welcomed it in concluding the treaty.

Mr. Oliver Letwin: Will the hon. Gentleman give way?

Mr. Henderson: No, I will not give way now. There is also no question of the ECJ's having any role in the maintenance of law and order in this country or our internal security.
I have given the Committee a fair opportunity to debate the issues. [HON. MEMBERS: "Hear, hear."] I hear a lot of hungry voices and I therefore wish to conclude my remarks. I hope that when the Committee votes on the amendments, it will reject them.

Mr. Howard: I shall attempt to be brief. We have had a good and wide-ranging debate. It is true, and I acknowledge it, that not every speech from my hon. Friends has been identical with the speech before or after. Nor would I wish that to happen, because the Conservative party does not encourage the kind of clone-like attitude that we see from the Labour party.
Notwithstanding the predilection of the Labour party for clones, it obviously escaped the Minister's mind that almost 50er cent. of speeches by Labour Back Benchers were seriously critical of the Government. The speeches by the right hon. Member for Llanelli (Mr. Davies) and for Merthyr Tydfil and Rhymney (Mr. Rowlands) went far beyond the one point to which the Minister referred—their questioning of a lack of a target for high employment. Their devastating speeches indicted the Government's whole strategy. It was a pity that the Minister did not acknowledge that.
I thank the Minister for the extent to which he endeavoured to answer the questions that we raised. He took much trouble over that and I am grateful, but he did not entirely succeed. For example—I do not wish to detain the Committee, but I wish to dwell on this example so that we may have a proper answer in the future—Iut an important series of questions to him on the way in which qualified majority voting would work in the implementation of a common foreign and security policy. The Minister answered my question by talking about brakes; the way in which the unanimity rules could be used in certain circumstances to stop countries taking certain action.
The question that I put to the Minister was entirely different. What happens if a common decision on strategy has been taken to take certain action, for example, against

Iraq? What happens if a qualified majority decision is then taken that that action should stop short of the use of force? What happens if this country, for example, wishes to use force? In those circumstances, will this country be debarred from using force, according to the provisions of the treaty, by the qualified majority voting provisions? That is very important, and we have not had an answer. I hope that we shall have an answer; if not tonight, then at some future stage.
It has been clear from the debate that there are many different reasons for opposing article 1 and for voting for amendment No. 65. A number of my right hon. and hon. Friends have identified those reasons. There is the fact that the treaty brings in the social chapter. There is also the absence from the treaty of proper provisions for securing enlargement of the EU, to which the Opposition attach great priority.
My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) referred to the total failure of the Government to press the argument for the reform of the European Court of Justice. It is not a sufficient reason for failing to press the argument that there was not at first blush a tremendous amount of support from the other member states. In previous negotiations, we have secured our position by pressing home our case and by persuading our partners of its merits. That is what the Government manifestly failed to do at Amsterdam.
For all the reasons that I identified last week, and which my right hon. and hon. Friends have identified today, I urge the Committee to vote for amendment No. 65 and to reject article 1 of the treaty.

Question put, That the amendment be made:—

The Committee divided: Ayes 133, Noes 328.

Division No. 103]
[8.11pm


AYES


Ainsworth, Peter (E Surrey)
Fabricant, Michael


Amess, David
Fallon, Michael


Ancram, Rt Hon Michael
Flight, Howard


Arbuthnot, James
Forsythe, Clifford


Atkinson, Peter (Hexham)
Forth, Rt Hon Eric


Baldry, Tony
Fowler, Rt Hon Sir Norman


Beggs, Roy
Fox, Dr Liam


Bercow, John
Fraser, Christopher


Beresford, Sir Paul
Garnier, Edward


Blunt, Crispin
Gibb, Nick


Body, Sir Richard
Gill, Christopher


Boswell, Tim
Gillan, Mrs Cheryl


Bottomley, Peter (Worthing W)
Gorman, Mrs Teresa


Bottomley, Rt Hon Mrs Virginia
Gray, James


Brady, Graham
Green, Damian


Brazier, Julian
Greenway, John


Brooke, Rt Hon Peter
Grieve, Dominic


Browning, Mrs Angela
Hammond, Philip


Bruce, Ian (S Dorset)
Hawkins, Nick


Burns, Simon
Hayes, John


Butterfill, John
Heald, Oliver


Cash, William
Heathcoat-Amory, Rt Hon David


Clappison, James
Hogg, Rt Hon Douglas


Clark, Rt Hon Alan (Kensington)
Horam, John


Collins, Tim
Howard, Rt Hon Michael


Cran, James
Howarth, Gerald (Aldershot)


Curry, Rt Hon David
Hunter, Andrew


Davies, Quentin (Grantham)
Jack, Rt Hon Michael


Davis, Rt Hon David (Haltemprice)
Jackson, Robert (Wantage)


Duncan, Alan
Jenkin, Bernard


Emery, Rt Hon Sir Peter
Johnson Smith, Rt Hon Sir Geoffrey


Evans, Nigel



Faber, David
Key, Robert






King, Rt Hon Tom (Bridgwater)
Sayeed, Jonathan


Kirkbride, Miss Julie
Shephard, Rt Hon Mrs Gillian


Laing, Mrs Eleanor
Shepherd, Richard


Lait, Mrs Jacqui
Simpson, Keith (Mid-Norfolk)


Lansley, Andrew
Smyth, Rev Martin (Belfast S)


Letwin, Oliver
Soames, Nicholas


Lewis, Dr Julian (New Forest E)
Spelman, Mrs Caroline


Lidington, David
Spicer, Sir Michael


Lilley, Rt Hon Peter
Spring, Richard


Lloyd, Rt Hon Sir Peter (Fareham)
Steen, Anthony


Loughton, Tim
Streeter, Gary


Luff, Peter
Swayne, Desmond


MacGregor, Rt Hon John
Syms, Robert


McIntosh, Miss Anne
Tapsell, Sir Peter


MacKay, Andrew
Taylor, Ian (Esher & Walton)


Maclean, Rt Hon David
Taylor, John M (Solihull)


McLoughlin, Patrick
Taylor, Sir Teddy


Madel, Sir David
Tredinnick, David


Major, Rt Hon John
Trend, Michael


Malins, Humfrey
Viggers, Peter


Maples, John
Walter, Robert


Maude, Rt Hon Francis
Wardle, Charles


Mawhinney, Rt Hon Sir Brian
Wells, Bowen


May, Mrs Theresa
Whitney, Sir Raymond


Moss, Malcolm
Whittingdale, John


Nicholls, Patrick
Widdecombe, Rt Hon Miss Ann


Norman, Archie
Wilkinson, John


Paice, James
Willetts, David


Paterson, Owen
Winterton, Mrs Ann (Congleton)


Prior, David
Woodward, Shaun


Redwood, Rt Hon John
Yeo, Tim


Robathan, Andrew
Young, Rt Hon Sir George


Robertson, Laurence (Tewk'b'ry)



Rowe, Andrew (Faversham)
Tellers for the Ayes:


Ruffley, David
Mr. Stephen Day and


St Aubyn, Nick
Mr. Nigel Waterson.




NOES


Abbott, Ms Diane
Bruce, Malcolm (Gordon)


Adams, Mrs Irene (Paisley N)
Burden, Richard


Ainger, Nick
Burnett, John


Ainsworth, Robert (Cov'try NE)
Burstow, Paul


Alexander, Douglas
Butler, Mrs Christine


Allan, Richard
Byers, Stephen


Allen, Graham
Cable, Dr Vincent


Anderson, Donald (Swansea E)
Campbell, Alan (Tynemouth)


Armstrong, Ms Hilary
Campbell, Mrs Anne (C'bridge)


Ashton, Joe
Campbell, Menzies (NE Fife)


Atherton, Ms Candy
Canavan, Dennis


Atkins, Charlotte
Cann, Jamie


Ballard, Mrs Jackie
Caplin, Ivor


Banks, Tony
Casale, Roger


Barnes, Harry
Caton, Martin


Barron, Kevin
Chapman, Ben (Wirral S)


Battle, John
Chaytor, David


Bayley, Hugh
Chisholm, Malcolm


Beard, Nigel
Clapham, Michael


Begg, Miss Anne
Clark, Dr Lynda (Edinburgh Pentlands)


Beith, Rt Hon A J



Bennett, Andrew F
Clark, paul (Gillingham)


Benton, Joe
Clarke, Charles (Norwich S)


Bermingham, Gerald
Clarke, Eric (Midlothian)


Berry, Roger
Clelland, David


Best, Harold
Clwyd, Ann


Betts, Clive
Coaker, Vernon


Blears, Ms Hazel
Coffey, Ms Ann


Blizzard, Bob
Colman, Tony


Borrow, David
Connarty, Michael


Bradley, Keith (Withington)
Cook, Frank (Stockton N)


Bradshaw, Ben
Cooper, Yvette


Brake, Tom
Cotter, Brian


Brand, Dr peter
Cousins, Jim


Breed, Colin
Cranston, Ross


Brinton, Mrs Helen
Crausby, David


Brown, Rt Hon Nick (Newcastle E)
Cryer, John (Hornchurch)


Brown, Russell (Dumfries)
Cummings, John





Cunningham, Jim (Cov'try S)
Illsley, Eric


Cunningham, Ms Roseanna (Perth)
Ingram, Adam



Jackson, Ms Glenda (Hampstead)


Dafis, Cynog
Jackson, Helen (Hillsborough)


Dalyell, Tarn
Jamieson, David


Darvill, Keith
Johnson, Alan (Hull W & Hessle)


Davey, Edward (Kingston)
Johnson, Miss Melanie (Welwyn Hatfield)


Davey, Valerie (Bristol W)



Davidson, Ian
Jones, Barry (Alyn & Deeside)


Davies, Rt Hon Denzil (Llanelli)
Jones, Helen (Warrington N)


Davies, Rt Hon Ron (Caerphilly)
Jones, Ieuan Wyn (Ynys Môn)


Dawson, Hilton
Jones, Jon Owen (Cardiff C)


Dean, Mrs Janet
Jones, Martyn (Clwyd S)


Denham, John
Jowell, Ms Tessa


Donohoe, Brian H
Kaufman, Rt Hon Gerald


Doran, Frank
Keeble, Ms Sally


Eagle, Angela (Wallasey)
Keen, Ann (Brentford & Isleworth)


Eagle, Maria (L'pool Garston)
Keetch, paul


Edwards, Huw
Kelly, Ms Ruth


Efford, Clive
Kemp, Fraser


Ellman, Mrs Louise
Kennedy, Charles (Ross Skye)


Ewing, Mrs Margaret
Kennedy, Jane (Wavertree)


Fearn, Ronnie
Khabra, Piara S


Fitzpatrick, Jim
Kilfoyle, Peter


Flint, Caroline
King, Ms Oona (Bethnal Green)


Follett, Barbara
Kingham, Ms Tess


Foster, Rt Hon Derek
Kumar, Dr Ashok


Foster, Michael Jabez (Hastings)
Laxton, Bob


Foster, Michael J (Worcester)
Leslie, Christopher


Foulkes, George
Levitt, Tom


Galbraith, Sam
Lewis, Ivan (Bury S)


Galloway, George
Lewis, Terry (Worsley)


Gapes, Mike
Liddell, Mrs Helen


Gardiner, Barry
Linton, Martin


George, Andrew (St Ives)
Livsey, Richard


George, Bruce (Walsall S)
Lloyd, Tony (Manchester C)


Gerrard, Neil
Llwyd, Elfyn


Gibson, Dr Ian
McAllion, John


Gilroy, Mrs Linda
McAvoy, Thomas


Godman, Norman A
McCabe, Steve


Godsiff, Roger
McCafferty, Ms Chris


Gordon, Mrs Eileen
McCartney, Ian (Makerfield)


Gorrie, Donald
McDonagh, Siobhain


Grant, Bernie
McDonnell, John


Griffiths, Jane (Reading E)
McFall, John


Griffiths, Win (Bridgend)
McGuire, Mrs Anne


Grocott, Bruce
McIsaac, Shona


Grogan, John
McKenna, Mrs Rosemary


Gunnell, John
Mackinlay, Andrew


Hain, Peter
McNulty, Tony


Hall, Mike (Weaver Vale)
MacShane, Denis


Hall, Patrick (Bedford)
Mactaggart, Fiona


Hanson, David
McWalter, Tony


Harris, Dr Evan
McWilliam, John


Heal, Mrs Sylvia
Mahon, Mrs Alice


Healey, John
Mallaber, Judy


Heath, David (Somerton & Frome)
Mandelson, Peter


Henderson, Doug (Newcastle N)
Marsden, Gordon (Blackpool S)


Henderson, Ivan (Harwich)
Marshall, David (Shettleston)


Hepburn, Stephen
Marshall-Andrews, Robert


Heppell, John
Martlew, Eric


Hill, Keith
Maxton, John


Hodge, Ms Margaret
Meale, Alan


Hoey, Kate
Michael, Alun


Home Robertson, John
Michie, Bill (Shef'ld Heeley)


Hood, Jimmy
Michie, Mrs Ray (Argyll & Bute)


Hoon, Geoffrey
Miller, Andrew


Hope, Phil
Moffatt, Laura


Hopkins, Kelvin
Moonie, Dr Lewis


Howarth, Alan (Newport E)
Moore, Michael


Hoyle, Lindsay
Moran, Ms Margaret


Hughes, Ms Beverley (Stretford)
Morgan, Alasdair (Galloway)


Hughes, Simon (Southwark N)
Morgan, Ms Julie (Cardiff N)


Humble, Mrs Joan
Morgan, Rhodri (Cardiff W)


Hurst, Alan
Morley, Elliot


Iddon, Dr Brian
Morris, Ms Estelle (B'ham Yardley)






Mudie, George
Southworth, Ms Helen


Mullin, Chris
Spellar, John


Murphy, Denis (Wansbeck)
Squire, Ms Rachel


Murphy, Jim (Eastwood)
Steinberg, Gerry


Norris, Dan
Stevenson, George


Oaten, Mark
Stewart, David (Inverness E)


O'Brien, Bill (Normanton)
Stewart, Ian (Eccles)


O'Brien, Mike (N Warks)
Stinchcombe, paul


Olner, Bill
Stoate, Dr Howard


O'Neill, Martin
Stott, Roger


Organ, Mrs Diana
Stringer, Graham


Osborne, Ms Sandra
Stunell, Andrew


Palmer, Dr Nick
Sutcliffe, Gerry


Pearson, Ian
Swinney, John


Pendry, Tom
Temple-Morris, Peter


Pickthall, Colin
Thomas, Gareth (Clwyd W)


Pike, peter L
Timms, Stephen


Pollard, Kerry
Tipping, Paddy


Pope, Greg
Todd, Mark


Powell, Sir Raymond
Tonge, Dr Jenny


Prentice, Ms Bridget (Lewisham E)
Trickett, Jon


Prentice, Gordon (Pendle)
Truswell, paul


Primarolo, Dawn
Turner, Dennis (Wolverh'ton SE)


Purchase, Ken
Turner, Desmond (Kemptown)


Radice, Giles
Turner, Dr George (NW Norfolk)


Rapson, Syd
Twigg, Derek (Halton)


Raynsford, Nick
Twigg, Stephen (Enfield)


Reed, Andrew (Loughborough)
Tyler, Paul


Reid, Dr John (Hamilton N)
Vaz, Keith


Rendel, David
Ward, Ms Claire


Roche, Mrs Barbara
Wareing, Robert N


Watts, David


Rooker, Jeff
Webb, Steve


Rooney, Terry
Welsh, Andrew


Ross, Ernie (Dundee W)
Whitehead, Dr Alan


Rowlands, Ted
Williams, Rt Hon Alan (Swansea W)


Russell, Bob (Colchester)



Ryan, Ms Joan
Williams, Alan W (E Carmarthen)


Salter, Martin
Williams, Mrs Betty (Conwy)


Sanders, Adrian
Willis, Phil


Savidge, Malcolm
Wills, Michael


Sawford, Phil
Wilson, Brian


Sedgemore, Brian
Winnick, David


Shaw, Jonathan
Winterton, Ms Rosie (Doncaster C)


Sheerman, Barry
Wise, Audrey


Sheldon, Rt Hon Robert
Wood, Mike


Simpson, Alan (Nottingham S)
Woolas, Phil


Singh, Marsha
Wright, Anthony D (Gt Yarmouth)


Skinner, Dennis
Wright, Dr Tony (Cannock)


Smith, Jacqui (Redditch)
Wyatt, Derek


Smith, John (Glamorgan)



Smith, Llew (Blaenau Gwent)
Tellers for the Noes:


Smith, Sir Robert (W Ab'd'ns)
Mr. Kevin Hughes and


Soley, Clive
Mr. Jim Dowd.

Question accordingly negatived.

Mr. Rowlands: I beg to move amendment No. 2, in Page 1, line 13, after 'Articles', insert
1, paragraph 9 (Cm. 3780, page 10)'.

The First Deputy Chairman of Ways and Means (Mr. Michael J. Martin): With this, it will be convenient to discuss amendment No. 8, in page 1, line 13, at end insert
'(except Article 2 paragraph 57)'.

Mr. Rowlands: The amendment was designed to offer the Committee the opportunity to discuss the new article F.1, but it has been made semi-redundant by the contributions to the previous debate, so I hope to be brief.
The shadow Foreign Secretary took up at least two columns of Hansard on the subject of article F.1 when he opened the debate on amendment No. 65. He made a bit

of a meal of the issue, and over-egged the pudding. I would not say that he was put in his place, but the position was, quite rightly, well qualified by the right hon. and learned Member for Rushcliffe (Mr. Clarke), who spoke from the Back Benches.
The shadow Foreign Secretary argued that the new article was vaguely defined and that it would be dealt with not by a judicial body but by politicians. I detected a somewhat derisory view of the idea that politicians should be involved. I think that he said that individual countries would be at the mercy of others. He argued that there was no need for such a provision, because if a country in the European Union fell into dictatorship, started persecuting its citizens, and confiscated private property or suspended the due process of law, there was one simple solution: expulsion.
I do not think that my hon. Friend the Minister had the full opportunity, despite his extensive reply to the previous debate, to remind us what procedures and effort would be required to expel a state under there sent provisions of the treaty, given that expulsion was the shadow Foreign Secretary's only solution. How difficult would it be to deal with a state that had offended?
When I tabled the amendment, I wanted to underline my support for the principle of the provision in the treaty. Despite some differences of nuance, I think that we all agree that it is essential that European Union membership—to become and to remain a member—should require good, fundamental democratic credentials. As many hon. Members said in the previous debate, it is almost impossible to envisage how one could sit on a Council of Ministers if one of the company was a colonel who had seized power in a coup.
That idea is not all that fanciful. The right hon. and learned Member for Rushcliffe reminded us of the fact that when I entered the House in 1966 Greece was governed by one of the most brutal abusers of human rights that western Europe has known for a very long time. As the right hon. and learned Gentleman also pointed out, the Iberian peninsula had been in a similar position. Therefore one need not go back into the mists of time to recall that, even within the existing membership of the European Union, in my parliamentary and political lifetime, we have had dictatorships and authoritarian Governments that would now be intolerable in the European Union.
Therefore it is important to assert that democracy is a fundamental obligation and to say that, if a member state persistently abuses fundamental human rights, it should be subject to discipline. However, I found it difficult to appreciate the argument by the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) that a country could go from nothing to expulsion without any gradation of action that could be taken by other member states to tackle the problem of persistent infringement of human rights.
We all support and endorse the argument made by the right hon. and learned Member for Folkestone and Hythe that, as are condition for membership, applicants must root their institutions in principles of democracy and human rights. It will be a matter of considerable scrutiny by the Commission and by the present Union that any applicant must fulfil those conditions and achieve those democratic institutions in a way that has a sense of permanence and does not look fragile or capable of being abused.
8.30 pm
I believe that we all agree with that, so one hopes that the situation envisaged in the article will not arise. If, as observations made by Front-Bench and Back-Bench Members on both sides of the Committee suggest, the provisions turned up in the treaty in anticipation of the problems that might possibly occur if applicant states enter the European Union but cannot sustain democratic institutions, obviously the key must be to ensure that the application process for membership ensures that the institutions that create and form that state are generally democratic.
I should be grateful if the Minister would reveal more about the origins of the article and tell us how and why it came into existence when it did. Was it anticipating some of the problems that may occur in the case of new applicants?
I wondered where I might get a feel for the issues that the article might wish to address. I believe that it is useful to bring to the Committee's attention the Agenda 2000 document and the Commission's assessment, under the Copenhagen criteria, of the political situation of the applicant countries. The document gives a flavour of some of the issues and arguments that may well arise, even after individual states have successfully joined the European Union, and of how, presumably, F.1 might address them.
I shall quote from two of the country reports of the Agenda 2000 Commission opinions. The first relates to an applicant country that I believe had expectations of being in the first group—Slovakia. The report obviously damaged those expectations. The following passage gives us an idea of the problems that might arise if a member state lapsed into certain behaviour. On the subject of applying the Copenhagen political criteria to Slovakia, the Commission said:
The operation of Slovakia's institutions is characterised by the fact that the government does not sufficiently respect the powers devolved by the constitution to other bodies and that it too often disregards the rights of the opposition. The constant tension between the government and the resident of the Republic is one example of this. Similarly, the way in which the government recently ignored the decisions of the Constitutional Court and the Central Referendum Commission on the occasion of the vote on 23/24 May 1997 directly threatened the stability of the institutions.
That is a powerful assessment of the fragility of the institutional position in an applicant state—Slovakia.
As a result of that Commission opinion, it now appears that Slovakia would not achieve membership without tackling, and satisfying the present European Union that it had tackled, those fundamental problems. In fact, as the Commission report says,
Despite recommendations made by the European Union in a number of demarches and declarations, there has been no noticeable improvement.
Would the provisions of article F.1 apply if a similar situation arose in a state such as Slovakia after it had joined the European Union? Are those the areas of constitutional and democratic concern that were considered when the article was drafted? If a member state in a sense persistently abused its own constitution in key respects relating to human, rights, would that allow the European Union to act as the article suggests?
I do not want to take too long because these arguments have been discussed, but I want to prise out of my hon. Friend the Minister some illustrations of the persistent breaches of rights that would trigger the processes described in the new article.
The other Commission opinion that raises a similar set of arguments is that on the political institutional position of Bulgaria. The Commission says that democratic institutions in Bulgaria
need to be reinforced by fuller respect in practice for the rule of law, at all levels of public administration".
It says:
the operation of the judicial system
needs to be improved
to protect individual liberties in the face of too frequent abuses by the police and the secret services.
That is another opinion in the context of an applicant state and the Commission giving its view. If such behaviour had occurred in a member state in the enlarged Union, would it be the type of behaviour that the article was meant or designed to start to bite on?
Those are the questions that have been left in my mind. I have listened in the Committee to most of our previous debates. I want to know more about the way in which Ministers envisage the operation of the provision.
If the article relates to the types of problems that have been identified in the Commission opinions on applicant states, I say to the right hon. and learned Member for Folkestone and Hythe that I believe that there is a case for a political judgment, not a judicial one. These are decisions about politics and democracy. I am not sure that judges are necessarily the best guides in that area. There is a case for saying that, in assessing whether certain behaviour is acceptable, the collective view of democratically elected politicians who represent public opinion is as good as that of a judge.
I have thought about the subject, because obviously one wants very clear criteria and they do not exist. I agree with the right hon. and learned Member for Folkestone and Hythe that there is a vagueness in the wording, but I do think that, in many cases, those will be matters of considerable political judgment as opposed to judicial interpretation. Therefore the decision to place the matter in the hands of the European Council, to allow the heads of state of every other member of the European Union to make these difficult assessments, probably achieves a balance in respect of such problems and issues. So I do not share the queasiness about the provisions of the article that the right hon. and learned Member for Folkestone and Hythe feels.
I certainly thought that the right hon. and learned Gentleman over-egged his case when talking about how one country can be left at the mercy of a random choice by other members of the Union. He should remember that a most elaborate procedure is involved. The decision must be unanimous; one third of the member states have to make an approach; the decision must be endorsed by two thirds of the European parliament. So built into the article is a fantastic number of hurdles that must be crossed before any state charged with persistent breaches of human rights can be suspended.

Mr. Cash: Would the hon. Gentleman be good enough to bear in mind the fact that although the Union is founded on principles of liberty, democracy and the rule of law, if we dig a little deeper into the behaviour of current member states of the EU we find that "fundamental freedoms" and the rule of law do not apply with equal


validity to all member states? I am not even thinking of Greece at this point. It is not xenophobic to claim that there is a serious problem in the EU already.

Mr. Rowlands: I defer to the hon. Gentleman's more detailed knowledge of the political performance of members of the current Union. I cannot think of any immediate examples of member states seriously abusing human rights. If the hon. Gentleman can, perhaps he will list them in his speech. As I understand it, the safeguards will apply to current members as well. I do find it difficult to believe that the sort of breaches envisaged in this article are being committed by any of the present 15 member states—but if they are, we should be aware of them and shoulder perhaps invoke a procedure to deal with them. There might be some virtue in that.
I certainly believe that the Union should uphold and stand up for these rights, and if there are any breaches of the kind the hon. Gentleman has in mind a power should be created to bring offending member states to book.
Earlier, my right hon. Friend the Member for Llanelli (Mr. Davies) rather wickedly suggested to me in conversation that some of the European Union's current institutions might not be up to the mark in certain respects. Certainly, no one can sack the Council of Ministers. One could play around with these arguments endlessly, but I for one do not share the qualms expressed by Conservative Members about the article. I just wanted to prise out of the Minister a better understanding of the context that gave rise to the article, and of the situations that might trigger its use.
When I entered the House in 1966, three of the current member states in the Union were then autocratically governed. That is why I believe it important to buttress the idea that the chief obligation on a joining state should be to uphold these fundamental rights—hence my support for the new article.

Mr. Howard: As the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) has said, I deployed my arguments on this matter fairly fully last Thursday and I do not intend to go over the same ground again. I would like, however, briefly to respond to the points that the hon. Gentleman has just made.
We start from the common position of wanting to do all we can to safeguard and advance basic human rights. The hon. Gentleman says that the treaty may not contain procedures at the moment that would enable a country seriously and persistently breaching fundamental human rights to be expelled, which would be my referred remedy if it ever came to it. My answer to that is put such procedures in the treaty. Just as the Government have put procedures into the treaty of Amsterdam to permit this much more unsatisfactory course to be adopted—depriving a member state of its rights but continuing to subject it to its obligations—so it would have been possible at Amsterdam to deal with the problem in the way I think preferable: providing procedures for expulsion.
It is not right to say, either, that on this alternative approach there would be nothing between the first step and expulsion. It would be perfectly possible for the other

member states to give measured warnings to the offending state and to make it clear that unless it mended its ways expulsion would follow. So there is no question of expulsion coming out of the blue.
I suggested last Thursday that it was difficult to identify any precedent for the procedures that have been put in to the treaty of Amsterdam. The Minister has not volunteered any precedent. I do think it extraordinary to say of a member state, however badly it has behaved, that it will continue to be fully bound by all the obligations of the treaty but deprived of all its rights under it.
As my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) conceded in his speech earlier today, the procedure could be used and abused to take away the voting rights of a recalcitrant state. The hon. Member for Merthyr Tydfil and Rhymney calls that a fanciful scenario. perhaps so, but if this Committee is to carry out its responsibilities in relation to the scrutiny of a treaty, it is incumbent on us to identify scenarios that may not be very likely but which could be turned to the disadvantage of this country. It is also our duty to point out the dangers.
It is, after all, not entirely unprecedented for provisions in European treaties to which we have signed up and agreed to be used in a way that was never predicted at the time. One obvious example would be the way qualified majority voting procedures in respect of health and safety were used to introduce a 48-hour maximum working week. No one in the previous Government who agreed to QMV for health and safety measures at the time of the Single European Act ever contemplated their use to introduce a maximum length of working week. Indeed, none of my hon. Friends during the debates on that treaty made this point, to my knowledge. I have no doubt that had they made it that, too, would have been dismissed as fanciful or extremely unlikely.
The point is that we have a duty to examine the provisions of treaties such as this and to make sure that there is no scope for abuse or for their use in a way that may never have been intended or which might be to the disadvantage of our country. That is the basis on which I offered my observations on Thursday, and I remain unconvinced by the doubts expressed by the hon. Member for Merthyr Tydfil and Rhymney.

Sir Raymond Whitney: My right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) is right, and we would all agree that the Committee has a duty to examine legislation such as this, especially legislation of an international nature, to make sure that there are no traps or hidden dangers or faint possibilities that might endanger our national interest. However, there is a danger of that awareness and alertness turning into paranoia. We can take matters so far that they verge on the absurd.
I hope that there is no dissension on either side of the Chamber from the view that article F.1 of the treaty of Amsterdam is well intentioned and necessary. It is directed not only at the potential new members of the European Union, but possibly at existing members. It started as an initiative at the Copenhagen summit, where all attention was focused on the enlargement of the European Union, to which my party has traditionally attached a good deal of weight.
We want to ensure, of course, that the character of the European Union does not fundamentally change. That is what the article is surely designed to achieve. As the


hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) pointed out, before any candidate member is accepted, there is a test to be passed. We must recognise the possibility that a country can be in a state of grace and pass the test one year, but—especially in the case of democracies that are not deeply rooted—a few years later the standards achieved to pass the test may no longer be met. Therefore criteria are required.
By their very nature, such criteria cannot be spelled out in every last detail. I believe that the drafting of the treaty is adequate. I shall not read the treaty out; the hon. Gentleman mentioned it and we went over this ground in the earlier debate. It is clear enough. We know what we mean when we say that human rights are persistently and seriously breached. It is chopping logic to suggest that we do not understand. Even if one nation did not know, the other 14 or 15 would surely get it right.

Mr. Letwin: All of us throughout the Chamber know what is meant, and we all agree that it is necessary to do something about a member state in such circumstances. Does my hon. Friend agree, however, that sometimes, regrettably, there has been a tendency for the European Court to apply interpretations of clauses in treaties that go far beyond the ordinary meaning of those terms, with a view to establishing certain patterns of integration? Does he agree that that could give rise to the problems to which my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) alluded?

Sir Raymond Whitney: No, I do not agree. I suggest that my hon. Friend read article F.1 of the treaty. He will see that, before the matter ever came near the court, it would have to be approved by unanimity minus one—that one being the state in the dock. It is for the Council of Ministers to make the judgment and activate the other criteria—one third of the Council to bring the charge and two thirds of the European parliament to go along with the conviction, so to speak. At a subsequent stage, if the accused state wanted to apply to the European Court of Justice, it would have a right to do so.
My hon. Friend may fear what might happen to Britain, but that is another safeguard. There are so many hurdles in the procedure that we should rest assured. I am not saying, and my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) made the point that one cannot say definitively, that the world will not go mad tomorrow, but compared with the prospect of no such provision being included in the Amsterdam treaty, and compared with the risk of the provision being absurdly abused, common sense would judge that we need the provision.
Earlier in the debate, some pretty rum options were offered to the Committee. We were told that the provision might be applied to a Communitywide minimum wage. Our minimum wage would allegedly be set at too low a level, and that might be interpreted—or misinterpreted—as a serious and persistent breach of human rights. Misguided as the concept of a minimum wage might be, the possibility that Greece would be in a position to vote with the rest of the Community and condemn us does not bear contemplating.
We were told about the possibility that if we had—orerhaps if we did not have—abortion on demand, that would be seen as further evidence that we were in serious and persistent breach of human rights. Another such

possibility might arise if we changed—or failed to change—the age of homosexual consent from 18 to 16. My hon. Friend the Member for Stone (Mr. Cash), who, happily, is not in his place, even mentioned the risk of paedophilia. How crazy can we get?
It is fun to have an after-dinner debate, but this is a serious issue. We want to ensure that any criticisms of the Amsterdam treaty—the Opposition do indeed have some criticisms—are legitimate and well founded.
My right hon. and learned Friend the Member for Folkestone and Hythe wants the treaty to contain a mechanism for expulsion. There might be a case for that, or perhaps such a mechanism exists already. I look forward to the Minister of State explaining the exact legal position, as the hon. Member for Merthyr Tydfil and Rhymney invited him to do.
Perhaps there could be a sanction of total expulsion, but the suspension option strikes me as sensible. This situation is posited: a state passes the entrance exam; it would be up to snuff to be allowed in. A few years later, things go wrong—a military coup, or whatever. Surely the sensible approach would be for the other member states—14, 21 or however many there are—to say to the offending state, "You are suspended. All the rest of us abhor what you are doing, and you are suspended until you return to the paths of righteousness." That would be the common-sense approach.
I hope that we will not pursue any amendment that would expunge article F.1, which is a perfectly sensible and necessary element in the Amsterdam treaty.

Sir Teddy Taylor: My hon. Friend the Member for Wycombe (Sir R. Whitney) and I have been in the House of Commons for a very long time. That being so, it is only fair to tell my younger hon. Friends that, although we have great respect for my hon. Friend's sincerity, kindness, aptitude and integrity—I am sure that he is kind to animals as well—he has been wildly optimistic about all the previous treaties that we have signed. There are those of us who have said that it would all end up in a horrible mess, and we have been proved right.
My hon. Friend has said that he is rather worried about the attitudes of some of those who occupy the Opposition Front Bench, right hon. and hon. Friends whom I regard as having great integrity and wisdom. At the same time, there is a great danger of over-optimism. We hear it said that things will work out in the interests of the people and it is to be hoped that all will go well. I hope that, on reflection, my hon. Friend—and certainly newly elected hon. Friends—will bear in mind what has happened.
So many glorious opportunities have been offered to us—for example, signing the treaty of Rome, enacting and implementing the single Act and signing the Maastricht treaty. I am certain that they have all worked out terribly badly for the people of Europe. I am thinking not of big business but of the people and how they have suffered. I am thinking also about the abuse of public money, of which some of my hon. Friends and I warned.
9 pm
My hon. Friend said that we did not need to worry about that, but think of all the money that we are spending on, for example, destroying food. I wonder how my


hon. Friend can sleep at night while thinking about poverty in the world and misery in the United Kingdom against the background of the vast sums that are spent on destroying food as a result of the absurd policies that he and others are supporting.
Let us be extremely careful about agreeing to new and splendid sentences being written into treaties. Unfortunately, treaties are ratified and they look lovely—they state, in effect, that we are all in favour of nice things happening—only for the wretched European Court, or individuals, including some of the Euro-enthusiasts, to come along and to interpret legislation in a ridiculous way that causes us to wonder why we agreed to it in the first place.
I am sure that the hon. Member for North Durham (Mr. Radice), who has this moment entered the Chamber, will remember how we were passing rules to the effect that dumping would be handled by the European Union. We thought that that was all right because it was necessary only to prove conclusively that someone was selling something cheaper abroad than at home and that nasty commercial activity was taking place. We used to have a splendid organisation in this country that enabled us to take action if someone was dumping. There was an appeal process and it was necessary to provide evidence. What happens now? The Commission decides whether dumping has taken place. It comes to a conclusion and there is no appeal. No proof is required. Let us be extremely careful about approval, because things do not always work out as we would wish or think.
We must bear in mind the interests of big business. There are some who wonder why it is so enthusiastic about extending the powers of the European Union. It seems to me, however, that the reason is clear. Big business much refers to deal with organisations such as the Commission and other non-democratic organisations than with democratic Governments.
Philips, for example, can obtain a far better deal for itself by involving itself with the Commission rather than trying to deal with a democratic process. That being so, I hope that right hon. and hon. Members will be extremely careful. I hope also that they will support the amendment and not agree to the insertion of the ridiculous article F.1. Surely we should not vote in the House of Commons for something that is completely nonsensical. Article F.1 states that the EU is a democratic organisation. Younger Members—apart from the old gentlemen, my hon. Friend the Member for Wycombe and me—should think carefully. If they do, they will find that the EU stands basically for the destruction of democracy. All the things that we fought to reserve in a democratic process will be undermined by the EU.
Democracy means that the people's voice should count. It means that people should be able to express opinions and that others should listen to them. It is sad that in the context of the EU people's views do not matter and public opinion is largely irrelevant.
I shall give some examples from my own experience. For some time, I have been a member—there was only a brief interruption—of the Conservative party. The party has an annual conference where many of its supporters come together. The Conservative conference this year was held in Blackpool. Apart from the wisdom that we heard

from those who occupy the Opposition Front Bench in this place, delegates were handing out badges. That is one of the things that we do in the Conservative party. We tend to demonstrate our affiliation to something by wearing badges. One of the badges read, "Save Duty Free in 1999". That is something that some members of the Conservative party support.
In fact, democracy can do nothing about saving duty-free goods. Even if every Member in the House of Commons, including the Prime Minister and my right hon. Friend the Leader of the Opposition, said, "We want to keep duty free in 1999," nothing could be done, unless there was a unanimous decision of the Council of Ministers to allow Britain to preserve the duty-free system.
I fear that the Conservatives, most unusually for them, were misleading themselves by handing out badges about preserving the duty-free system. Another wee badge was handed out about saving Britain's fish. I should love to save our fish, and I think that most Members of this place—especially young Members—would support me. Unfortunately, given the wording of article F.1, there is nothing that we can do to that end. If the Prime Minister, my right hon. Friend the Leader of the Opposition and all Front-Bench and Back-Bench Members were to say, "We shall save Britain's fish," nothing would happen. Decisions are made by a majority vote of the Council of Ministers. Why put in the words supporting democracy? It is not democracy at all. The democratic process can do nothing whatever.
Mr. Martin, you are, as we know, one of the most conscientious Members of parliament that we have, and you have a surgery just like everyone else. people come to our surgeries to complain. What do they complain to me about? A big deputation of 12 people, including a clergyman who brought a dog to show that he was fond of animals, came to see me. They asked me to vote to stop the export of live cattle. I had to tell them, "I am terribly sorry, but we cannot do anything about it," to which they replied, "Well, the Liberal Democrats support us." I said, "That does not really show anything. It is a sad fact that, even if you had a Liberal Democrat Government, which would bring many advantages, there is nothing you could do about the export of live cattle."
People complain to me about VAT, saying, "Why should we pay VAT on things that are wrong? Will you vote against it?" I have to say no. To that, some people might say, "Well that shows that you MPs are a useless crowd and you should have done something about it." But there is nowhere else to go.

Mr. Mike Gapes: Does the hon. Gentleman agree that the policies about which he is complaining were introduced as a result of the Single European Act, which was introduced by Baroness Thatcher and the Government whom he supported? Therefore, he should criticise himself rather than the European Union.

Sir Teddy Taylor: Younger Members who are conscientious and good attenders sometimes do not check their facts. I assure the hon. Gentleman that I voted against every single clause of the Single European Act. He is trying to make party political points when we are talking about democracy, and that is what is wrong with


these amendments. Instead of people talking about democracy, freedom and liberty, they try to make silly party political points. I am glad that the hon. Gentleman has come to the debate, because quite a few newer Members do not bother, but please check up. Some of us have been warning and voting against this legislation time after time.
I also remind the hon. Gentleman that his Government are introducing this legislation. All Governments do this for the best of reasons. I knew Baroness Thatcher very well. She is a very fine woman who did great work, but she, like all Prime Ministers, started off saying, "Europe is in a mess. It is not going well. I am going to sit around the table and try to sort them out." She brought out what she thought was a very good treaty to try to improve free trade. In fact, it did not. The Prime Minister before her said that he was going to do the same.

The First Deputy Chairman: Order. The hon. Gentleman is going rather wide of the amendment. I note the examples that he has given. One or two examples are fine, but when he goes on at great length to give the Committee examples, he is going wide of the amendments before us.

Sir Teddy Taylor: You are absolutely right, Mr. Martin. I am sorry that I was distracted. This is what happens. We try to make a conclusive case, younger Members sometimes ask questions, which I am sure are well intentioned, and we get diverted.
The simple point that I should like to make is: how on earth can Members vote for a clause that is utter and complete nonsense? Can anyone say with any sincerity that things are decided in the European Union on the basis of democracy? Democracy means the rights of the people. What can the people do? Say, for example, Mr. Martin, your constituents said, "I am upset that £1.2 billion is spent on subsidising the growing of high-tar tobacco. I want to do something about it." I am sure that, with the splendid Member of Parliament that they have, they would ask, "What can you do about it?" The answer is absolutely nothing. [Interruption.] Hon. Members might laugh, but I assure them that some people feel very sincerely about the issue of tobacco. They think that it is shocking to waste money on subsidising the growing of high-tar tobacco. They think that the health risks of tobacco should be taken very seriously. Some hon. Members might disagree, but for goodness sake do not forget that many people think that.
What can people do? For whom can they vote? The sad fact is that, under the European Union, the powers have gone. people's views are of no consequence whatever. By all means, if we are to have treaties, let us put in things that are sensible. Do not write into treaties things that are simply untrue. That is vital. Happily, I have never been on trial, but I should hate to be tried by a law that was nonsense. How would hon. Members like to be tried on the basis of a law that was a load of codswallop and nonsense? Some unfortunate country—perhapsortugal, Greece or Britain—will be on trial, and liable to expulsion on the basis of a law that is utter nonsense, illogical and silly and does not add up. If someone is on trial, it should be on the basis of a law that is sensible.
I hope that hon. Members will think about my final point. My hon. Friend the Member for Wycombe and I know what goes on, because we have been around for

a long time, but new Members may not be aware of it. Decisions are made in the European Union, not on the basis of what is right or wrong. The Council of Ministers is not like some of our splendid Select Committees with their excellent Chairmen. We ask what is right and what is wrong, what we should support and what we should oppose, whereas decisions in the European Union are arrived at by horse trading.
We may want to export beef because there is so much of it that we do not know what to do with it, and we may want the French and the Germans to support us. We would support them on one Council to get their support on another. That is worrying. Britain may do something that others do not like. Our splendid shadow Foreign Secretary is a man of integrity and toughness, but in government he may do something that others do not like. The danger is that we are creating circumstances in which we may be subject to such horse trading. It is a very bad thing indeed.
I hope that hon. Members will think carefully about the amendment. We have passed piles of laws, and we never know what we are doing when we pass these treaties, because the courts interpret them widely. We have some protection, because the courts would not take us up on the basis of this provision as they do with other provisions: we would have to have a vote beforehand. Quite honestly, it is silly to write something into a treaty that is nonsense. Any treaty that says that the European Union is founded on the principles of democracy is utter and complete nonsense. There may be good intentions, and those who support the European Union may think that it will do people good, although it has not yet shown that it will, but the plain fact is that we should not write into treaties provisions that are utter and complete nonsense.
Conservative Members have many attributes, but Labour Members in particular care about democracy. It mattered to the Labour party: people were prepared to be locked up and beaten up to protect the rights of working people. Sadly, the rights of working people are being undermined massively—in some areas, totally—by the European Union. I do not like it, and I do not think that the majority of people like it. We should not write nonsense into law, and those who argue that the European Union is democratic are misleading themselves. It is not true, it has not been true, and it never will be true. Let us get rid of this silly nonsense, and support this excellent amendment.

Mr. Swayne: I want to speak in favour of amendment No. 8. Several hon. Members have outlined the extreme unlikelihood of the provisions in article F.1 ever being brought into force. That begs the question: why is the article in the treaty?
This provision is difficult to oppose: after all, who could oppose the principle of human rights? However, there are widely differing conceptions of what constitutes a right and how it should be implemented. Those different conceptions arise from the different traditions and histories of member states. That is the proper way to implement such human rights.
The intrusion of the European Union into the realm of human rights in this article of the treaty is a retrograde step. As a consequence, because of differing national traditions, the form of human rights that is adopted will be diluted and remote from our view of human rights.
The treaty states that the European Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms and the rule of law. Those principles are common to all member states. They are fine-sounding words, but they bear only an approximation to reality.
Rights in England are usually understood as vetoes, such as the right not to be imprisoned without due process and the right not to have one's house searched or occupied. By and large, rights in the continental tradition have tended to be regarded as claims on the Executive, obligations that must be fulfilled. For example, such an obligation on the state might be the right to some form of social protection. It is precisely on the basis of that difference that my hon. Friend the Member for Wycombe (Sir R. Whitney) was wrong in not perceiving that there could be a dispute between member states on the basis of different perceptions of what constitutes a human right. It is all very well for my hon. Friend to rely on the good sense and fair play of other member states, but our experience in this matter bids us to be cautious.
My recollection of the case that we brought over the European working time directive is that the European Court ruled against us on the basis that what constituted a health and safety measure was what the Council of Ministers thought constituted such a measure. No protection is afforded by relying upon the words or their plain meaning.
It is questionable whether the member states even rely on any common understanding of the rule of law. Our understanding of the rule of law in England is based on the fact that the Executive are subject to the law because it makes the king. There is a different concept in some continental traditions. The treaty, which ignores the distinct European traditions and relies on the concept that is outlined in article F.1, is most definitely a step away from our tradition. What have we to gain from it, we who already have the advantage of habeas corpus and trial by jury? We have much to lose and little to gain. In that respect, it is instructive to note the way that article F.1, by being brought into the treaty, effectively demotes the old article F.1 which, of course, required the European Union to respect the different traditions of the member states.

Mr. Doug Henderson: I have been called earlier than I expected. I am grateful to my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) for moving the amendment in a supportive way. He often does that, although not always. As the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) said in his short speech, there was much discussion on the issue to which the amendment relates during our debate on the earlier group of amendments. We are debating an important part of the Bill. The Government cannot accept the amendment, but I know that its purpose was to enable the Committee to debate the issues. I hope that my hon. Friend will eventually withdraw his amendment.
Hon. Members have asked about the expulsion procedures. They might find this strange, but there are no procedures for expulsion in the rules. As far as I am aware, there was no amendment to the draft documents

that were circulated at the intergovernmental conference before 1 May. The previous Government did not table an amendment to insert an expulsion clause. I have checked with officials at UKREP in Brussels and as far as I am aware no amendment was tabled.
Where did the concept of expulsion come from? It came from the potential enlargement of the European Union. The hon. Member for New Forest, West (Mr. Swayne) asked what we had to gain. The answer is a constructive role in the EU's enlargement, to which the previous British Government were also committed and to which the Opposition, I think, are committed. It is an important issue, which we may discuss in more detail when we reach other clauses. We will certainly discuss it on Thursday in the debate in the House on the Luxembourg summit.
Enlargement is an important issue for Europe's future security and economic prosperity. We in democratic countries were the first to criticise the Governments in central and eastern Europe before 1988. Now we have to offer those countries the hand of friendship. We have to say that we want them to be part of our wider Community and that, if they can meet the conditions that have been laid down—we want to help them to do that—they can be part of the enlargement.
However, there has to be a little protection for the integrity of the European Union. That is why the provision is important. It is not so much that it is going to be used. I think that all countries would want to use it only as a last resort and after a serious and persistent breach of the regulations and repeated warnings that countries have to change their act. If they do not, the provision will be invoked. If, after all that, the nations of the European Union agree unanimously, except for the one country involved—at the moment, 15 minus one—and the European parliament has its say, a country could be suspended.
We would have to be extremely careful about how an expulsion provision is drafted because being a member of the European Union is a privilege and obligation not only for the nation, but for its citizens. One part of a nation being in serious and persistent breach of the basic obligations of EU membership does not mean that other citizens, who perhaps have nothing to do with that, but who have contracts with other EU citizens, should be penalised. That serious question has to be investigated if we are to introduce an expulsion provision.
That point was discussed in the short time that I spent at the intergovernmental conference, when the original proposals were considered. It was felt that a suspension clause, which could become permanent for the nation, although its citizens might still have certain obligations and privileges, would be in place unless the wrong was put right.

Mr. Cash: Has the Minister given serious thought to the question that I tried to raise earlier about the common principles that apply to the existing European Union? Has some form of analysis been made, even within the existing EU, let alone with any prospective new members, of what the common principles are in relation to democratic procedures, accountability, trial by jury, habeas corpus and such things? Otherwise, simply stating


that there are common principles, which are supposed to be endorsed into our law as a result of these debates, is meaningless.

Mr. Henderson: I am sure that the hon. Gentleman has read the Commission document "Agenda 2000" on enlargement.

Mr. Cash: indicated dissent.

Mr. Henderson: I refer the hon. Gentleman to it. In it, the Commission outlines the sort of tests that a country has to meet to gain admission to the European Union. Many of those principles, which are accepted without any serious doubt by all EU partners, are the ones that, at the minimum, would apply. However, in response to a similar question, which the hon. Gentleman asked me in the Select Committee, I said that those principles change over time.
There are fundamental principles such as habeas corpus and others to which the hon. Gentleman referred, but others relating to the interpretation of democracy, the relationship between the police and the justice system and so on change as circumstances change. I think that the nations of the European Union are sensible enough to interpret that fact. It is a political interpretation, which was an important point made by the right hon. and learned Member for Rushcliffe (Mr. Clarke). I am satisfied on that point and I know that our partners in the European Union are too.
The hon. Member for Wycombe (Sir R. Whitney) put it as well as it can be put, if he does not mind my saying so, when he said that article F.1 is well intentioned and necessary. I hope and believe that it will be interpreted sensibly by nations. We are all clear about the reasons for it: when the new countries, which have changed a great deal over the past 10 years, apply to join the European Union and begin to meet some of the economic criteria, they know that they must enshrine in their democracy the political test put to them. Their response must be lasting and sustained; if not, they would risk being caught under the article. The importance of the article is that it concentrates the minds of new countries and, indeed, our own on ensuring that we continue to meet those desirable standards. With that explanation, I hope that my hon. Friend the Member for Merthyr Tydfil and Rhymney will feel able to withdraw the amendment.

Mr. Rowlands: On this occasion, I accept my hon. Friend's reasons for not accepting the amendment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Howard: I beg to move amendment No. 3, in page 1, line 13, after '2', insert '(except paragraph 19)'.

The First Deputy Chairman: With this, it will be convenient to discuss the following amendments: No. 4, in page 1, line 13, after '9', insert
'(except Article 2 paragraph 22)'.
No. 59, in page 1, line 13, at end insert 'except Article 2(3)(c)'.
No. 34, in page 1, line 13, at end insert
'other than in Article 2, paragraph 19)'.

No. 36, in page 1, line 13, at end insert
'other than in Article 2, paragraph 22)'.
New clause 21—Appointments to Employment Committee—
'.—Pursuant to Article 2 of the Treaty of Amsterdam, paragraph 19 (Cmd. 3780, age 31), Her Majesty's Government shall make appointments to the Employment Committee in consultation with employers' and workers' organisations.'.
New clause 27—Social Chapter: Report to parliament—
'.—Her Majesty's Government shall make a half-yearly report to parliament on the implementation of Article 2, paragraph 22 of the Treaty setting out the United Kingdom legislation and employment implications arising from the new Employment Chapter and Social Chapter as agreed in the Amsterdam Treaty which shall be subject to resolution by each House of parliament.'.

Mr. Howard: The amendments deal with European social policy, in particular the scrapping of Britain's opt-out from the social chapter, and the new employment chapter agreed at Amsterdam. Let me make it clear at the outset that the Conservative party is opposed to both. We believe that they will lead to more regulation, less flexibility and lost jobs. They are bad for Britain and bad for Europe.
In 1992, my right hon. Friend the Member for Huntingdon (Mr. Major) negotiated an opt-out for Britain from the social chapter. That was no mean achievement. It was a hard-won gain which was warmly welcomed by British business. Even Jacques Delors acknowledged that it was an excellent deal for Britain. The United Kingdom would, he said, become
a paradise for Japanese investment".
That prediction has been amply justified.
Let us consider the facts. The United Kingdom is the No. 1 destination for inward investment. In 1995–96, Britain attracted a third of all inward investment into the European Union. That included more than 40 per cent. of all Japanese and American investment and more than half of all Korean and Taiwanese investment. With this investment have come jobs—British jobs.
The UK has a higher proportion of its working population in work than any other major European Union country and, unlike France, Germany or Belgium, our unemployment rate is well below the European Union average. The truth is that because we have a flexible labour market, excellent industrial relations and low overheads, Britain is a good place in which to do business.
Our strike rate has been lower than the European average for the past nine years and we have the lowest labour overheads of any member of the European Union. For every £100aid in wages, employers must add non-wage costs—such as social security contributions and health insurance—of £32 in Germany, £41 in France and only £18 in the United Kingdom. It is those non-wage costs, not the level of the wages themselves, that do such damage to a company's ability to compete. By signing up to the social chapter, the Government risk having those burdens imposed on British business—burdens that will chip away at our competitiveness, destroying British jobs.
Ministers talk endlessly of the importance of job creation. The trouble is that they fail to understand how jobs are created. As the chairman of the German equivalent of the Confederation of British Industry has said:
Excessively high German labour costs are costing more and more German jobs.
On another occasion, he said:
we have too rigid labour laws. We have too high social costs and taxes. We have the shortest working week in Europe. The German Government spends 50 per cent. of GDP as opposed to 42 per cent. in Britain. No wonder we have problem.
The chairman's assessment is backed up by The Wall Street Journal, which pointed out that
Britain imposes a much lower burden of social charges on employers than any other European country. British social taxes were less than half those in Switzerland, 40 per cent. of those in Germany and 29 per cent. of those in France.
The French newspaper Le Monde has explained that
if unemployment is dropping in Britain it is because they have done everything to deserve it. For several years, considerable efforts have been made to improve the workings of the labour market, thereby boosting job and new company creations".
What, then, are the benefits that our opt-out from the social chapter has denied us? What is the pressing need that has not been met since that opt-out was won? What is the injury, the damage and the detriment that the opt-in agreed at Amsterdam is supposed to remedy? The Government have never answered those questions. Why? Because there are no such benefits and no such need. There is no injury, damage or detriment. If there were, it would be perfectly possible for this parliament to remedy it.
9.30 pm
I understand that the Labour party has different views on these matters from Opposition Members. No one who saw the Minister of State, Department of Trade and Industry reply to yesterday's debate on burdens on business could be in any doubt that old Labour is still alive and kicking. The Government have a large majority. If they take the view that further social legislation is desirable, they can introduce such legislation in the House. There is no need to make—and no justification for making—our economy vulnerable to measures imposed on us against our will by the European Commission and other member states.
The Prime Minister once pretended that such an imposition could not happen. He once claimed that we could pick and choose the elements that we wanted to accept. The Prime Minister and the Government would be powerless to prevent damaging measures being imposed on the United Kingdom against our will because, under the social chapter, so many subjects are decided on the basis of qualified majority voting.
The Government are keen, when it suits them, to pray in aid the views of the director-general of the CBI. They would do well to listen to him on this subject.
If you sign up to the social chapter,
he warned,
you can't actually be sure that you'll have your way, because some directives will be covered by qualified majority voting. There is, however, a way to pick and choose, and that is available to the Labour party if it wants to have it as its policy. The way to pick and choose is actually not to sign up to the social chapter.

The president of the Board of Trade has already come up against the problem. As my hon. Friend the Member for Sevenoaks (Mr. Fallon) pointed out in yesterday's debate, when the president of the Board of Trade—having told BBC television's "On the Record" that she did not support Commissioner Flynn's proposals for national works councils—was asked how the Government could prevent the proposals becoming law, as they would be introduced under qualified majority voting, there was a long pause and then she said:
Well, er, we shall see how things go.
That is the clarion call of the president of the Board of Trade to British business.
Under the social chapter, legislation in any of the following areas can be adopted by qualified majority vote: working conditions, informing and consulting workers, equality between men and women in relation to work opportunities and treatment at work, the integration of people excluded from the labour market, and health and safety at work. The social chapter allows burdens to be imposed on business in virtually all areas of social and employment policy.
Already, two pieces of legislation have been introduced under the social chapter: the European works councils directive and the parental leave directive. The more profound danger of the social chapter, however, lies in the potential it provides for more far-reaching social legislation, such as the European Commission's proposal for national works councils. The existing works councils directive affects only large, multinational companies, but Commissioner Flynn has suggested that companies with as few as 50 employees should be forced to set up works councils. What is to be gained from agreeing to provisions that would enable British firms to be forced to do that? The Government are opposed to the proposal. A raft of further social legislation is currently under review.
The treaty also contains a new employment chapter. It makes member states' employment policies a matter of common concern and requires member states to co-ordinate their action in that respect within the Council. The European Council will consider the employment situation each year and adopt conclusions. On the basis of the European Council's conclusions,
the Council, acting by a qualified majority on a proposal from the Commission and after consulting the European parliament, the Economic and Social Committee, the Committee of the Regions and the Employment Committee…shall year draw up guidelines which the Member States shall take into account in their employment policies.
Member states will also be required to submit an annual employment report to the Commission. Once again, the Council,
acting by a qualified majority on a recommendation from the Commission, may, if it considers it appropriate in the light of that examination, make recommendations to Member States.
Employment policy will cease to be a matter for individual member states. Britain's employment policy will become a matter for all European Union members. Guidelines which "shall"—not "can" or even "should"—direct employment policy will be determined by qualified majority vote in the Council. If the Commission and the Council are not happy with a member state's efforts to harmonise employment policy, they can, again on the basis of qualified majority voting, make recommendations to that member state.
What repercussions could such a chapter have? What guarantees can the Minister give us that it cannot be used to impose on this country an employment policy that we oppose and which would destroy, not create, jobs? What assurances can be given that a British Government will not find themselves having to support and implement employment policies that may be wholly inappropriate or unrealistic? Is it not the case that the European Court of Justice could interpret the employment chapter as placing a duty on the British Government to pursue employment policies dictated by other European states—policies that could well be against Britain's national interest?
Under the new employment chapter introduced at Amsterdam, we can expect yet more interference and regulation. In particular, the treaty introduces a mechanism for so-called "incentive measures" which will be adopted by qualified majority vote. That is a potential source of expensive employment programmes for which we would have no need, but for which the United Kingdom would be expected to pay. Will the Minister explain the scope of the "incentive measures" that can be agreed by qualified majority voting under the employment chapter? Is it not the case that moneys could be voted under those provisions to finance worthless schemes in other countries despite the opposition of the British Government?
The future of our country and of all our fellow citizens depends on our ability to earn our way in a world that is more fiercely competitive than ever. In that competitive world, all the crucial decisions are made at the margin. Marginal differences in price, in quality and in delivery can make all the difference between winning orders and losing them, between creating jobs and destroying them and between building prosperity and undermining it. Over the years, Conservative policies have given this country a critical competitive advantage that has enabled the British people to win orders, to create jobs and to build prosperity.
The cumulative consequence of the Government'solicies—of which their signing up to the social chapter is one of the most prominent examples—will be the destruction of that critical margin of competitiveness. It will happen throughout the country, particularly to small and medium firms. In the end, we shall see what we have seen under every Labour Government—newspaper headlines that read, "Unemployment up again".
That is the harsh reality behind the debate. It is why the Conservatives will continue to speak up for the men, women and children throughout the country who will lose out. There is only one sure way to protect the country from those unwanted burdens—to stay outside the social chapter. We should keep our opt-out and delete the provisions from the treaty. That is why I invite hon. Members to vote for amendments Nos. 3 and 4 and new clause 27.

Mr. Laurence Robertson: My background is in industry. I started on the shop floor at the age of 18 and eventually moved into industrial management. I have had many clients over the years and worked with many thousands of people. I have also been active in small business—it was getting smaller and smaller—for about 14 years. The nearer the election came, the smaller it got.
I have also been unemployed. I know how wasteful unemployment is of people's energies and talents. I know how hard it is for families. Unemployment is my main concern. The social chapter and a range of other measures from Europe will cause unemployment.
The social chapter does not contain a great deal at the moment. It is a procedure. However, that is what makes it dangerous. Not only could it grow to incorporate many things, but the countries involved in it could move on to the social charter. They have agreed to move towards it. That would involve many more measures than are contained in the social chapter. We should consider that carefully.
Europe has had employment regulations for many years. That is why growth in Europe has been comparatively sluggish. European countries have had low levels of job creation, particularly compared with the United States. My visits to the United States have shown me that, much though I like the country, it is hardly as efficient as Britain. However, it is less regulated. That is the difference between the United States and the European Union.
There is high unemployment in the European Union. Unemployment is lower in this country. That is not a coincidence. Our unemployment rate is approximately 7.2 per cent., as against 10.6 per cent. on the continent. Why is that? We have been doing well for some years, but we cannot be complacent. There are many threats to the well-being of our national economy, not just from Europe. Economies across the world are starting to challenge us. Those low-tax, low-spend economies are creating jobs and growth. They are a direct threat to employment in this country. We must be conscious of that.
How do we meet that threat and come out on top? We cannot do it through the old jobs-for-life syndrome. Those days are long gone, regardless of which party is in government. We have to do it through efficiency. Will the social chapter and all the regulations that are coming from Brussels help us to be more efficient? They cannot. It is no coincidence that we are doing so much better than other European Union countries. We do not have the labour laws that exist on the continent. We do not have the social chapter. We have better industrial relations and fewer add-on labour costs. In short, we are basically less European.
What do we mean by less European? It seems that we are attracting a great deal of investment into this country for one reason: we are so much better than the rest of Europe. If we were exactly the same as the rest of Europe, I should have thought that inward investment would have gone right to the geographic centre of Europe. It would make sense to invest in the very centre. The Japanese are not investing in the very centre of Europe, because it is not as efficient as this country.
9.45 pm
As my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) said, we must look at the add-on labour costs—the extraordinary amount that it costs to employ a person in Germany, and on the continent generally, compared with this country. The difference between what it costs to pay somebody and what that person takes home is crucial. In Germany, it costs a fortune to employ a worker, but that worker


does not take as much home. That crucial difference creates jobs. Jobs are created not by Governments, regulations or even businesses, but by customers with money in their pockets.
The social chapter and all the employment laws that are coming forward will stifle business in this country. As my right hon. and learned Friend said, if the measures are so good, why cannot the Government introduce them in this country? When they are found to fail, the Government could repeal them in this country. If companies want to live by the rules and laws anyway, that is a matter for them.
The debate is about something more important than just the contents of the social chapter. I refer to a letter that I received only yesterday from a company in my constituency. It states:
My company is product of the Thatcher revolution. Founded in 1984 with just eight people, we now employ approaching 300. Our growth is directly attributable to changed attitudes in both the factory floor and management. We have built up a worthwhile export business. What I do not understand is why sensible British businessmen should see any advantage in belonging to such a high cost club.
That is the crucial point. The regulations have not helped that man to build up his business. He describes very well what has helped him to do so: efficiency.
The social chapter is bad in itself, but the issue goes an awful lot deeper. Taken with a range of other things, it is about who governs Britain. We have the social chapter and economic and monetary union, under which the monetary and fiscal policies of countries that join it will be determined not in each country, but in Brussels.
I am not frightened to address the issue of sovereignty. I know that we have had a little debate about sovereignty, just on Conservative Benches. We should not walk away from it. Sovereignty is not just some romantic theory. It enables us to create the economy that suits our own industry, our own businesses and our own work force. We should not be afraid to claim the right to govern ourselves in the areas of employment, monetary policy and fiscal policy.
We have done remarkably well in this country. I speak genuinely on behalf of people on the shop floor. I am concerned about their jobs. I see a great threat to jobs in this country. We need only look across to Europe to see the 18 million people who are unemployed. Do we want to join them and go along with the sluggish growth that we have seen in Europe for far too long, or go our own way and be able to compete with the Asian tigers and all the growing economies in the world?

Mr. Gapes: Listening to some of the Conservative Members' speeches has reminded me of the old saying, "Just because you are paranoid doesn't mean they are not out to get you." Conservatives have the view that, as the hon. Member for Tewkesbury (Mr. Robertson) said, we are less European. Geographically and culturally, people in the United Kingdom are European. We have been members of the European Community and then the European Union for many years. We have had a role and we have had an opportunity to shape the future of Europe and the European Union.
Anyone listening to the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) would have assumed that he was making his speech in March or April

of this year. The fact that the Conservatives went down to an election defeat and that the British people overwhelmingly rejected the party that was opposed to the social chapter seems to have escaped him. He did not seem aware of the fact that a majority of people in this country wanted us to join the social chapter. The majority wanted the right to consultation for workers and the right to parental leave. [Interruption.] The hon. Member for South-West Devon (Mr. Streeter) is shouting from a sedentary position.

Mr. Swayne: Will the hon. Gentleman give way?

Mr. Gapes: In a moment. I am addressing my remarks to the hon. Gentleman who is shouting at me.

The Chairman of Ways and Means (Sir Alan Haselhurst): Order. I hope that the hon. Gentleman is addressing his remarks to the Chairman.

Mr. Gapes: I apologise, Sir Alan. I am happy to give way to the hon. Member for South-West Devon if he wishes to make a point without shouting at me from a sedentary position. He obviously does not, so I shall give way to the hon. Member for New Forest, West (Mr. Swayne).

Mr. Swayne: Given the huge majority that the Government achieved, they could enact whatever social protection they wanted for the British people. What was to be gained by giving away our right to prevent social protection provision of which the Government might disapprove and which might cost jobs?

Mr. Gapes: Nothing has been given away, in the sense that the hon. Gentleman suggests. We have gained the right to influence discussion in a European Union with a single market containing multinational companies and transnational corporations that operate in this country. The largest of those had already started to apply the provisions of the social chapter to their work forces in the European Union single market, including those employed in the United Kingdom. Therefore, by signing up to the social chapter, the British Government and people have an opportunity to influence provisions that are already being applied and are indirectly influencing employment conditions for employees of British companies that are subsidiaries of European or multinational companies.

Mr. Swayne: Will the hon. Gentleman comment on the fact that the social chapter has remained a dead letter and has not influenced employment practices, because other member states were not prepared to disadvantage themselves through regulations that did not apply in this realm?

Mr. Gapes: The hon. Gentleman should consult some of the largest multinational companies that operate in Germany, France, Italy and the United Kingdom and ask them whether they had adopted different provisions that affected the way in which they treated their employees. In many cases, they had not.

Mr. Howard: If business is so keen on the social chapter, why has even the director-general of the Confederation of British Industry advised against doing anything about the opt-out, as I pointed out in my speech?

Mr. Gapes: This Government have to represent the interests of workers as well as those of big business.


The hon. Member for Rochford and Southend, East (Sir T. Taylor) made disparaging remarks about big business, but business wants Britain to be at the heart of developments in the European Union. We have a responsibility not just to business, but to employees. The rights to consultation, paternity leave, paid holidays and, under other provisions, limits on the number of hours worked should be protected by a Government who care about the people as a whole. I am pleased to say that since 1 May we have had such a Government in this country.

Sir Teddy Taylor: What does the hon. Gentleman think is causing the horrendous level of unemployment, which is getting worse, on the continent of Europe?

Mr. Gapes: For the hon. Gentleman's information, unemployment in this country has fallen since the Labour Government signed up to the social chapter. Therefore, the argument that increasing unemployment is related to the social chapter cannot be used—it is palpably untrue. There are many complex reasons for unemployment. They include our position in the business cycle, which is why my right hon. Friend the Chancellor of the Exchequer has said that we do not meet the convergence criteria for the single currency. The business cycle in different European states is at different points.
Other practices in European countries have not contributed to falling unemployment. They have older industries that have not shed employment as this country did in the 1980s. There are many complex reasons, but I suspect that I shall be told that I am drifting away from the subject of the amendment, so I shall not go down that line further.
It is essential that this country contributes to shaping the social and employment policies that the EU develops. If we are to do that, we need not only to build co-operation and partnership with other member states, but to bring into the domestic debate the important concept of social partnership. That is accepted widely throughout the rest of EU among Christian Democrats, Liberals and Social Democrats.

Mr. Swayne: Shame.

Mr. Gapes: The hon. Gentleman says, "Shame." The European People's party—the group in the European parliament of which Conservative MEPs and their party are members—talks about the social partnership. It believes that it is important to have a dialogue and a relationship with both sides of industry, and that it is important to build consensus on employment legislation for the future of all the people of this continent. That European model—the Christian Democrat, Social Democrat and Liberal consensus on the socialartnership—will lead to success in European economies in the long term.

Mr. Letwin: I am grateful to the hon. Gentleman, who has been extremely patient. Moreover, by sitting down for a moment, he may rescue himself from imminent explosion. How many years of persistent high unemployment on the continent of Europe would it take to convince him that there is a structural problem? Would 20 do, or 30, 40 or 50? At some point, presumably, his view of the economic cycle would collapse. Could he give us some guidance?

Mr. Gapes: I dealt with that point in my answer to the hon. Member for Rochford and Southend, East. Regrettably, since 1945, living standards in this country have fallen below those of France and Germany. That is not unrelated to the fact that, for the bulk of that period, this country has, unfortunately, been under Conservative Governments. According to recent statistics, living standards in this country are below those of EU countries which, historically, were not as affluent as the UK.
In European countries, there are currently some problems with unemployment, which is unfortunate. That is why the EU summit at Amsterdam decided that we needed co-ordinated measures among the different states. That is why the Swedish Government—with the support of the British and French Governments—proposed that an employment chapter be contained in the Amsterdam treaty. That is a positive and important step. Last week, I said that the employment chapter was limited, and it does not go far enough. More work can be done in that area. The important principle is that there is a commitment that the European Union is about not only the single market but social aspects and employment.
We are trying to create a people's Europe, a Europe not only for those who can move money around and are in charge of big business but for those with economic and social aspirations and employment aspirations.

Mr. Swayne: Does the hon. Gentleman accept that large companies that can afford compliance favour the social protection legislation of which he has spoken, and that small companies, which cannot afford that compliance, are being driven out of business to the advantage of the large companies that increasingly dominate the market?

Mr. Gapes: If the hon. Gentleman studies the social chapter and the social provisions, he will notice that there are size limits in the regulations and that the smallest companies are not expected to comply.

It being Ten o'clock, THE CHAIRMAN left the Chair to report progress and ask leave to sit again.

To report progress and ask leave to sit again tomorrow.—[Ms Bridget Prentice.]

Committee report progress; to sit again tomorrow.

Orders of the Day — ENVIRONMENTAL AUDIT COMMITTEE

Ordered,
That Mr. Matthew Taylor be discharged from the Environmental Audit Committee and Mr. Norman Baker be added to the Committee.—[Ms Bridget prentice.]

Orders of the Day — CONSOLIDATED FUND BILL

Ordered,
That, at the sitting on Tuesday 9th December, any Consolidated Fund Bill ordered to be brought in and read the first time shall be proceeded with as if the Second Reading thereof stood as an Order of the day, and Standing Order No. 56 (Consolidated Fund Bills) shall apply.—[Ms Bridget prentice.]

Orders of the Day — LIAISON COMMITTEE

Ordered,
That Mr. John Horam, Dr. Lewis Moonie and Mr. Peter L. Pike be added to the Liaison Committee.—[Ms Bridget prentice.]

Orders of the Day — HOUSE OF COMMONS COMMISSION

Ordered,
That Sir Alastair Goodlad be discharged from the House of Commons Commission and Dr. Lewis Moonie and Sir Peter Lloyd be appointed members of the Commission under the House of Commons (Administration) Act 1978.—[Ms Bridget prentice.]

Orders of the Day — Bird Reserves

Motion made, and Question proposed, That this House do now adjourn.—[Ms Bridget prentice.]

Mr. David prior: I am delighted to have secured a debate on the impact of coastal erosion, saltwater and flooding on bird reserves and wetlands. The matter is of vital concern not only to people living on the coast but to many bird watchers throughout the country.
It is difficult to imagine, when standing in the Chamber, what it is like to walk along the coasts of Norfolk and Suffolk, with that wonderful Norfolk sky above one and the sea pounding into the beach. As one walks along the beach, one will see that there are very few cliffs, because all that separates the sea from most of the land is raised beaches, shingle and shingle banks.
In so far as there are cliffs, they are largely composed of clay and sand, and the coast is retreating all the time. At places such as Benacre and Covehithe in Suffolk one can see yards of land given up to the sea every year. I went to Cley in my constituency in February 1996, just after the main flood in that month. There was 6 ft of water across the Cley and Salthouse marshes, and much of the village was flooded. There were six breaches in that year.
I have since been back several times, once with the Royal Society for the protection of Birds. The ferrymen at Morston, the fishermen at Wells and Salthouse and the wildfowlers who operate along that part of the coast tell me that there are more ducks and geese now than there were 40 or 50 years ago. That is testament to the essential vitality of the habitat.
There are few more exhilarating sights than the Brent geese rising at Minsmere or sounds than the calling of widgeon at the mudflats at Blakeney or the boom of the bittern over the Cley marshes; but all is not well along that part of the coast. Sea levels are rising, partly because of climatic changes but also because of the long sink of the eastern part of the country, which has been in progress since the ice age.
The best guess of the Department of the Environment, Transport and the Regions is that, by the year 2050, sea levels will have risen by about 50 cm. What is probably worse for this part of the world is the growing unpredictability of the weather, with high tides and strong storms. Local people fear that Governments, regardless of their political persuasion, will take action only when it is too late, and that funds will be available to take action only when their houses and bird reserves are under water.
There are two essential habitats close to the sea that I wish to speak about. The first is the salt marshes, many of which have been squeezed between rising sea levels and coastal defences. It is estimated that about a third of the salt marsh in East Anglia has gone in the past 15 years.
The second—and much more important—habitat is the freshwater wetlands comprising lagoons, grazing marshes and reed beds. About 50 per cent. of the United Kingdom's freshwater reedbeds are located in East Anglia. Those important wetlands mainly shelter behind shingle banks, which have become weakened by constant breaches, by a diminution in the natural supplies of shingle and by constant bulldozing, which has reduced their integrity.
In Norfolk and Suffolk, we have three bird reserves of international importance, at Minsmere, Cley and Titchwell. They have their high-profile birds—we have 14 of the 20 known booming bitterns in this country, we have marsh harriers and we have bearded tits—but for the amateur twitcher such as myself, it is the great mass of pintail, mallard, widgeon, geese of all kinds, avocets, terns which nest on Blakeney point, snipe and lapwing that make that part of the country unique.
Those sites are recognised in the Ramsar convention and under the EU bird directive and habitats directive as sites of international importance. Hundreds of thousands of people visit Titchwell, Cley and Minsmere each year. Those habitats are at risk.
I should like tout three points to the Minister. First, we must have a national strategy for our coastline. At the moment, responsibility falls between cash-strapped district councils, the Environment Agency, the Ministry of Agriculture, Fisheries and Food and the Department of the Environment, Transport and the Regions. Surely it would make sense to have one body to co-ordinate activities, to ensure that shore management plans are properly integrated, to pool expertise, to avoid duplication and, above all in the context of this debate, to ensure that environmental considerations are given a higher weighting.
Existing shore management plans assume that a further 770 hectares of freshwater reserves will be lost in the foreseeable future. I do not believe that that is acceptable.
Secondly, on funding, MAFF recently proposed a new funding formula, which North Norfolk district council believes will greatly discriminate against rural areas in favour of urban areas. It will do so because it is much easier to assess the economic benefits in an urban area than to assess the intangible value of environmental assets. Specifically, I ask the Minister to consider giving greater recognition to the value of wildlife habitats and adjusting the MAFF formula accordingly.
Thirdly, there should be effective mechanisms and financial incentives to create replacement habitats where existing sites cannot be maintained. The Royal Society for the protection of Birds and I are not asking for existing sites to be preserved at all costs. Obviously, there will be times when the economics do not stack up or, for geological or landscape reasons, coastal defences do not make sense, but in those cases we should like new habitats to be established so that there is not a net loss of habitat in freshwater areas.
I recommend the Minister, if he is ever in north Norfolk, to spend a few minutes at Stiffkey, where he will see that Lord Buxton has recreated a new freshwater habitat designed to—

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): indicated assent.

Mr. Prior: Perhaps the Minister has been there. That habitat was created with the bittern especially in mind.
There is an urgency about this matter. It would be tragic if we had to have this same discussion in two, three or four years' time when these areas have been flooded. The Minister will know of the damage that saltwater can do to these habitats. Only this year, the bittern population at Cley has declined dramatically owing to the saltwater

flooding of just a year ago. I would ask the Minister to consider a funded, comprehensive plan of action for the Norfolk and Suffolk coasts, giving greater emphasis to rural areas and wildlife interests; and where habitat loss is unavoidable, ensuring that it is replaced elsewhere.

Mr. Bob Blizzard: I should like to add my support to virtually everything the hon. Gentleman has said. The wetland nature reserves of the Suffolk coast attract significant numbers of visitors, just as they must do in Norfolk. They are thus of economic benefit to my constituency and the surrounding area. While I support the environmental thrust of the hon. Gentleman's argument, I would also point to the economic value of coastal protection schemes.

Mr. Prior: The hon. Gentleman is right. Tourism is a vital part of the economies of Suffolk and north Norfolk.

Dr. George Turner: The hon. Gentleman will be aware that only yesterday I opened a new visitor centre at Titchwell which already attracts about 140,000 visitors a year. As well as their international importance for wildlife, these unique places on the north Norfolk coast are also some of the jewels in our tourist industry—Titchwell is a good example. I hope that the Minister will take account of that when allocating resources to protect this sort of environment.

Mr. Prior: I agree. The three bird reserves, Minsmere, Cley and Titchwell, are unique assets that bring many visitors to Suffolk and north Norfolk.

Dr. Ian Gibson: I welcome the debate because I believe that an ecological disaster is waiting to happen, not just in Norfolk but throughout the world. Saltwater infusion causes the death of the freshwater fish on which the birds feed and breed. On the broads, the salination of the wetlands owing to higher sea levels is the cause of considerable anxiety.
The climatic research unit at our local university of East Anglia made the national headlines today for pointing out that there will be temperature rises—despite all the good work that we hope will be done in Kyoto this week. That will mean that the sea will rise, and these magical areas in Norfolk and the rest of the world will find that their habitats will be compromised—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Gentleman must resume his seat when I am on my feet. This is an Adjournment debate in which a short intervention is permitted, but not a speech—unless the hon. Gentleman has the prior permission both of the hon. Member who initiated the debate and of the Minister.

Mr. Prior: I thank the hon. Gentleman for his comments. There is no doubt that a fundamental change which will affect sea levels is under way. There are limits to what Governments or anyone else can do to limit the implications. The difficulty for wildlife habitats is that there is, in a sense, nowhere for the sea to go because of developments along the coast. If the coastal roads and houses had not been built, the coastline would have found its own natural place. However, that is not the position.
If we want to preserve these habitats, some of them will have to be moved. The Minister will be aware of the claybank scheme at Salthouse, which is being proposed


with the general support of the Royal Society for the Protection of Birds and others. Even with that scheme, which is generally recognised to be a good one, we will lose one third of the grazing marshes at Salthouse. That is a price which we will have to pay.

Mr. Keith Simpson: I reinforce the comments of the hon. Member for Norwich, North (Dr. Gibson). There is a major impact not only on the north Norfolk coast, but on the whole of Norfolk and Suffolk and my constituency, which borders the Broads. All the people who live in the area feel that the environmental changes will have a major impact not just on the wildlife, but on the areas in which they live. As my hon. Friend said, unless action is taken soon, we will have to take retrospective action, when it will almost certainly be too late.

Mr. Prior: I thank my hon. Friend. We should pay tribute to the work being done by the Environment Agency in protecting the Norfolk Broads. The scheme at Sea palling and Hattisburgh—the offshore reach—is remarkable. It is not yet proven scheme, but it is a remarkable feat of engineering.
I know that the parliamentary Secretary is a keen birdwatcher. I am sure that he has that at the forefront of his mind. In Norfolk and Suffolk, the issues that I have raised are crucial, and many people outside the area will listen carefully to what he says tonight.

The parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): I congratulate the hon. Member for North Norfolk (Mr. prior) on the way in which he has pursued this Adjournment debate. He has spoken with great authority and knowledge. The matter is important, and I am delighted to see so many hon. Members present for the debate.
I welcome the contributions of the hon. Member for Mid-Norfolk (Mr. Simpson), of my hon. Friend the Member for North-West Norfolk (Dr. Turner)—I envy any hon. Member who has palace as marvellous as Titchwell in his constituency—of my hon. Friend the Member for Waveney (Mr. Blizzard), who mentioned the similar problems and pressures experienced on the Suffolk coast, and of my hon. Friend the Member for Norwich, North (Dr. Gibson), who described the problems of global warming and rising sea level—an issue raised by the hon. Member for North Norfolk.
I am aware of the problems of habitat loss and the practicalities of recreating the habitat elsewhere. The hon. Gentleman painted a wonderful picture of the north Norfolk coast. It is an area with which I am extremely familiar, having gone there for many years. I know the Minsmere, Cley, Titchwell and Salthouse bird reserves very well, and have spent many happy hours there pursuing many different species—not always with great success.
In East Anglia alone it has been estimated that more than 770 hectares of internationally important wetlands are at risk from coastal erosion and saltwater flooding. The hon. Gentleman asked—quite reasonably—what is

being done to protect them. I visited Cley, not while it was flooded, but shortly afterwards, and I saw the damage caused to the habitat there. I am aware of the understandable concern of local people.
The United Kingdom is laying a leading role in the protection of key habitats, birds, plants and animal species through the on-going programme of special protection areas for birds, special areas of conservation for key habitats and species other than birds, and Ramsar designations for important wetlands.
The SPAs and proposed SACs will form part of the largest Europewide network of Nature 2000 important wildlife sites. In Norfolk, two overlapping such sites are the north Norfolk coast SPA and Ramsar site, and the proposed Wash and north Norfolk coast coastal SAC. They encompass a number of habitats of prime importance including fresh and saltwater grazing marsh, reedbeds, salt marsh and shingle structures.
Those are among the 38 key habitats identified by the UK biodiversity steering group as requiring urgent conservation action. In addition, they are home to a number of rare birds, animals and plants. Action plans for coastal floodplain, grazing marsh and reedbeds were published, together with 12 other key habitats as part of the steering group's 1995 report.
Implementation of these plans has now begun and among the actions proposed are the conservation, creation and re-establishment of such habitat types. Action plans for the remaining key habitats, including salt marsh and shingle structures, are being prepared and we expect to publish them by the end of 1998. Such habitat improvement work is also being undertaken as part of the salt marsh option of the Ministry's habitat scheme. That has considerable scope for recreating habitat.
Over the past decade the Ministry has been developing an integrated and strategic approach to sea defence and coast protection. I shall deal with the questions raised by the hon. Member for North Norfolk on that issue. I shall deal also with shore management.
The hon. Gentleman raised an important point about the need for co-ordination, an issue that needs to be considered. I shall take it up with my right hon. and hon. Friends in the Department of the Environment, Transport and the Regions.
The hon. Gentleman talked about the funding formula for flood and drainage schemes. I can reassure him in that he is right in saying that a funding formula has been reintroduced. That is right and proper because if there are limited resources there must be a priority scheme. It is necessary to identify the schemes that must be given to priority in terms of Ministry of Agriculture, Fisheries and Food spending and capital grant. Within the new formula, for the first time, environmental factors are recognised. That will be to the benefit of many rural schemes as it will be to the benefit of important habitat areas such as those which have been discussed tonight. I shall deal later with the replacement of habitats.
In 1993 the Ministry published, with the Welsh Office, a strategy for flood and coastal defence. The strategy set out a comprehensive framework within which Government and the operating authorities can work. In particular, the strategy advocates that defence measures should be based on an understanding of natural processes and, as far as possible, work with those processes. It is for operating authorities such as the


Environment Agency and local authorities to assess what measures are needed to reduce flooding and coastal erosion in their areas, and to come forward with plans for dealing with those problems that are cost-effective and sound in engineering and environmental terms. For its part. the Ministry makes grant aid available for capital defence schemes which meet these criteria. They are now part of the formula.
As part of the strategic approach to flood and coastal defence problems, the Ministry encourages operating authorities to take and consider a wide range of possible options. It has also promoted the setting up of coastal defence groups, which provide a forum for discussion and co-operation and help ensure that coastal processes taking place within particular stretches of coast are taken into account.
To assist those groups in the strategic management of discrete stretches of coast, the Ministry has encouraged the preparation of shoreline management plans and has issued guidance on their preparation. The aim of the plans is to provide a basis for sustainable coastal defence policies and to set objectives for the future management of coastline, taking into account natural coastal processes, coastal defence needs, environmental considerations, planning issues and current and future land use.
Plans should be the subject of wide consultation with all bodies with an interest in the coastline and should take due account of other coastal initiatives. Coastal groups also play an important role in integrating SMPs with the work of local planning authorities with a view to avoiding problems in the future by discouraging inappropriate development.
Shoreline management plans are intended to be living documents and will need to be reviewed at regular intervals.

Mr. Tam Dalyellk: What is my hon. Friend's policy on sand dunes and their preservation?

Mr. Morley: My hon. Friend raises an issue that is slightly beyond the scope of the debate. I know that he has raised it because sand dunes and sand dune stability are an important part of preventing coastal erosion. There are strategies for dealing with the issue that involve the planting of suitable grasses and vegetation, along with proper management plans. We listened to the advice of our statutory advisers—English Nature in England and the appropriate countryside bodies in Scotland and Wales.
We intend to have a timetable for reviews, which should be included in shoreline management plans. This approach enables evolving knowledge of physical processes, environmental issues and land use to be drawn into the planning process.
As our understanding of coastal processes has improved, we have seen attention turn to adapting and supplementing the natural processes with the aim of adopting responses to flood and erosion risk that are more environmentally acceptable and sustainable in engineering terms. By moving sea walls landward, we may be able to reinstate areas of valuable salt marsh and intertidal flat, and, by creating a new buffer zone seaward of the defended line, improve the defences. This "managed realignment" has been piloted at a number of sites in Essex by a series of joint projects involving the Ministry, the Environment Agency, English Nature and the National

Trust. These trials are still in progress, but preliminary results suggest that good results can be obtained. A consensus is emerging that managed realignment will play a significant part in the future management of low-lying coasts, and a joint Environment Agency/ English Nature policy paper on the subject is in preparation.

Mr. John Hayes: I had a meeting earlier today on this very subject. We discussed the precise examples in Essex that the Minister has given. The creation of the new salt marshes conflicts to some extent with the water abstraction policy of some of the water companies. Does he have any view on that in respect of the trials?

Mr. Morley: I can tell the hon. Gentleman that in Essex that was not the case. When using that strategy, other considerations have to be taken into account, and water abstraction is one. We have to look at where it is most appropriate for such a policy to be implemented. That is part of the study that is taking place.
I am aware that some environmental and conservation bodies feel that the current initiatives do not go far enough. However, as the hon. Member for North Norfolk has acknowledged, these are very difficult and complex issues and their resolution is still very much in its infancy. That is why Ministry officials have already been involved in a series of discussions with colleagues in the Department of the Environment, Transport and the Regions, the Environment Agency and English Nature about how we might resolve them.
In some cases, the managed realignment of flood defences will be the best option in terms of sustainability and cost. In other cases, it may not be appropriate to spend large amounts of public money for little environmental gain. We do not yet have a full picture of what area of freshwater coastal wetland is at risk. English Nature, the Environment Agency and the Countryside Council for Wales have just commissioned a joint study that will assess the potential impact of coastal processes on internationally important sites around the coast of England and Wales by utilising shoreline management plans. The report, due next year, will give us a clearer picture of the extent of the problem. The sites that the hon. Gentleman has discussed tonight will be included within the management plan, and it will be an opportunity to look at the serious issues that he has raised. I am particularly pleased that the Ministry initiative—shoreline management plans—will allow a better understanding of the natural impacts in environmentally important coastal sites.
As I have said, there are no easy answers to these problems, but I am grateful to English Nature, the Royal Society for the protection of Birds and other conservation bodies for their contribution to the debate in their leaflet entitled "Coast in Crisis". They, too, accept that it may not be possible or, indeed, wise to try to protect some sites from flooding. Building new sea walls or continuing to maintain existing walls may disrupt the natural processes of erosion and deposition of sediments and simply shift the problem—or create a new problem—elsewhere.
It is worth mentioning that the avocet—the symbol of the RSPB—has returned to Britain, and its habitat is the result of a breach in the floodbank due to the failure of sea defences. The point that I am making is that, sometimes, changes to the coast, to the wetlands, can have beneficial as well as detrimental effects in terms of wildlife.
The decisions that are taken must try to achieve a balance between the various competing interests. Although human health and safety must be paramount,

it may mean that tough decisions will have to be taken in relation to the enormous investment and costs of flood defence and sea defence. I can assure hon. Members who have spoken so eloquently tonight and made so well the case for coastal protection that we will take into account very carefully the points that they have made in this short debate.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Ten o'clock.